The last time I blogged about my Superannuation fund was in January (these are like a 401k or other Government mandated retirement account). Since then, three whole quarters have slipped by. As it is raining today (and a Saturday) I’m sat with a cup of coffee and the chance to review the fund, while I watch the rain fall against the window pain and the olive trees in my best friends courtyard.
In the 9 months to September 2016 my Superannuation returned 6.14%. The trailing 12 month performance is 12.01%. You can see a complete summary in the figures below:
These overall numbers are after tax and fees. I’m roughly 0.5 behind the average industry fund. My sense is that if my current strategy doesn’t work out over the next 3-4 years, I’ll have to change. I only recently diversified with an international fund, and this should have a good effect.
The chart below shows the comparative return (after fees) of my super fund vs. the median industry and retail fund. The ‘average return’ at the far right is a geometric mean (vs arithmetic) providing a more accurate average return. Interesting…
The chart below shows the growth of $10,000AUD invested in the overall fund since inception and compared to the ASX300 total return index.
Until mid year, I didn’t realise the numbers I used for the benchmark were not total return numbers. I’d been tracking my Super performance against the return of the ASX300 index excluding its reinvested dividends. I’ve now fixed this. I also track performance relative to the average retail and industry (low cost) fund which is more meaningful (since the ASX300 is 100% Australian shares and not really representative of a retirement portfolio; seen below, I’m about 80% invested).
One important change for 2017 is that I’ll split my retirement contributions, 60% Super, 40% outside investments for an overall goal of saving 15% of my pre-tax income for retirement (this is effectively 9% of my pre-tax income to Super and 6% to other investments). Ultimately, if I manage my money well I’ll shift this ratio to 40-60, 20-80 or 0-100 (a guy can dream right!).
The chart below shows the asset allocation, being approx 54% Australian Shares, 24% International Shares and the remainder in Cash.
The fund is less invested than I would like, it could be pushed to 90% invested with 10% in cash. Although it would be more volatile, it would almost certainly generate a higher return over the longer term.
Also, I’m only invested in managed (mutual) funds and cash. With three primary funds, shown below.
Next year will be a more interesting and flexible year regarding my retirement funds, and I’m looking forward to growing enough to claim financial independence well before 60.
Got a retirement account? How’s it travelling?