Thursday, May 3, 2012

Australian Personal Finance(PF) Blogs

I found some Aussie PF Blogs. I was beginning to think that Aussies abhor discussing their personal finances and only the British, Americans and Canadians enjoy dissecting their finances to pieces, obsessing over couponing, managing rentals and all that other Jazz.

PTMoney published a Personal Finance Bloggers Map which enables readers to locate a personal finance blogger situated near their city so that they can have 'local' blogs to follow. I thought that might interest you as a reader of this blog. Some of the personal finance blogs that I subscribe to and skim through often can be found in my old post 'PF Blogs I Often Read: Some Blog Lovin'.

If you're looking for Australian PF bloggers, look no further:

1. Kylie Ofiu : @ Aspiring Millionaire. Her blog is interesting. Advice appears sound however she's confessed that she has no official financial qualifications whatsoever so read with an open, inquisitive mind and do your due diligence.

2. My Journey To Eliminate Debt : Mainly for those in debt if you're looking for motivation. MJTED is a blog about a couple in their early 40s and their efforts in paying down their mortgage.

There are a few issues that I'd like to raise regarding that blog though- the author has an SMSF with just $32k? I wonder what fees she pays on running her SMSF? According to the Cooper Review below, SMSF with asset values below $50k pay an average operating expense ratio of 5%. MJTED has only $32k and with an average operating expense of 5%, she'd need to get an investment return of at least 8.5% to keep pace with inflation and a return greater than 8.5% to even be growing her retirement funds. Is she doing more harm to her retirement funds than good by opening up an SMSF with only $32k?

Fees on retail super funds are usually under 2% but again, the fees vary depending on how active the super fund is in 'managing' your funds. Maybe her 'professional' retail retirement fund crashed up to 40% or something drastic during the peak of the GFC, spurring her to open up her own SMSF despite not having a large fund value to work with?

If you'd like to understand the link between SMSF fund values and calculating the operating expense ratio, read the extract below:

6 comments:

  1. Hi Leakkhena, just came across your blog and thought I'd explain a bit more about my SMSF set up. The general ideas about SMSF's seems to be that unless you have $200,000 to invest then it's not worth setting up your own fund. This is a great article that explains more: http://www.esuperfund.com.au/articles/dollar200000myth.aspx

    It's certainly not for everyone and people really need to do their research and calculations first. For me it has been an excellent decision and lots of the backgound to why is explained in other blog posts.
    all the best with your blogging, always good to see another Aussie in the pf blogosphere!

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    1. Hi Louise. Thanks for the link. I understand SMSF better. To Leakkhena, thanks for sharing an informative post. I learned a lot.

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    2. Thanks Andrew for your comment. Louise has her own site which you can access in my post above or by clicking on her name in her comment.

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  2. Hi Louise, thanks for your feedback about having your own SMSF and the link to the esuperfund article. SMSF are for people who are actively reading, learning and implementing what they know in the investment market and applying it towards their super funds. If one isn't diligent with their personal finances, then opening and operating an SMSF may not be the best choice.

    What the article has not mentioned are the more onerous duties which you're probably aware of since you run one but I'll outline for my readers below:

    *Running an SMSF involves many fees and duties: Tax return, actuarial certificate, trustee minutes, calculating your pension requirements, preparing financial statements, audit report for the SMSF and these fees are roughly $2k-$3k if you prefer face to face contact with accounting firms. Again, if you wish to use leveraging in your SMSF by buying real estate or using margin loans and are required to open up a bare/security trust(by law), the fees are even higher

    *There have been many reports about people breaching their SMSF by using the funds to buy personal properties or using it on related parties etc - by paying peanuts to an online SMSF management firm (as quoted from the Esuperfund site, "ESUPERFUND currently has a free setup fee and a fixed annual fee of $699. This equates to an annual running cost of 0.35% on a $200,000 super benefit") then you could be paying peanuts and risk regulatory breaching and penalties applied if you don't know what you're doing and require more guidance

    *Income protection insurance, death insurance, TPD insurance which are easily acquired in mainstream fund will have to be actively researched and acquired in SMSF

    I'm all in favour of Self Managed Super Funds (when my super funds reach critical mass) but the time that it takes to run one, comply with legislation and also actively work on investing the $30,000 capital that was proposed by the link provided would be a lot of work, time, risk and if you don't know what you're doing, money and penalties if legislative requirements are breached.

    I've got more than the $30k mentioned in the ESuper article in my super fund and I still don't see the value of running my own SMSF yet due to the risk/time/amount versus the potential return. But to each their own of course as we all have our various reasons =)

    It's certainly good to see another Aussie PF blogger and good luck with your blogging too!

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  3. There are plenty other blogs that have substantial content worth reading, for example, we blog about financial planning and investments

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  4. Hi!

    I am truly thankful for this article and helped me to gain new ideas and options in management. Thank you for those info. I will take note of this. Have a great day ahead!

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