Should I pay off my mortgage or make extra superannuation contributions?

Hands down the most common question asked in our recent ‘Women and Superannuation’ seminars for Department of Local Government and Communities is:

“I have some extra income at the moment.
Should I use it to pay off my mortgage
or put it into superannuation?”

Spoiler alert: the mathematics is crystal clear on this one, which is why most financial advisors won’t hesitate to reply: “Put it in superannuation”. This fails to account for your emotions and stress levels, which aren’t nearly so clear-cut. Read more

Real lost super: could 93% of your superannuation disappear?

When we hear ‘lost super’, we imagine lots of funds that we don’t know about. This story is about another kind of lost super. It’s the money you had in your super account, but it’s disappeared.
 
So, could 93% of your superannuation disappear?
 
Very short answer: yes.
 
Longer answer: if you stop contributing, and you’re paying fees and premiums, it can happen. Do that for over a decade, and you could have next-to-nothing left.
 
My statements come from a real-life example, not a hypothetical one.

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Are Extra Superannuation Contributions the Best Decision?

I recently had an interesting (and somewhat frustrating) discussion with a financial planner about making extra superannuation contributions. In general, she thought it was a good idea. In general, I was against it. We both agreed that specific situations warranted different approaches, but in my specific case – a mid 30’s woman – she thought extra contributions were wise. I disagreed.

I believe most financial advisors would recommend extra superannuation contributions to minimise tax and boost retirement income. So, what else should you be aware of when making this decision?

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Wading into the ethical banking quagmire

Ethical banking started in response to educated consumers wanting assurance that their money is not being used to cause damage. Like recycling, taking shorter showers and buying your food from the local farmers market, it’s another way you can personally contribute to a sustainable future.

Inevitably, the devil is in the detail:

  • Who decides what’s ethical?
  • How do we ensure those with the ‘ethical’ badge are really doing the right thing?
  • What’s the cost to the consumer?
  • And the bottom line: which institutions could you bank with if you want to bank ethically?

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Book Review: Money Master the Game by Tony Robbins

When asked what books about finance I recommend, my response ten years ago was:

They’re still my go-to books for self-education on finance and I haven’t seen anyone do better on those topics yet. Reading those books has been pivotal in my investing life.

In recent years I’ve added to my list:

Then, in late 2014, Tony Robbins released ‘Money: Master the Game’. I immediately preordered the book, wondering if it would become another financial ‘Bible’. Read more

Money Mindset: Ask the right question

By Lacey Filipich BEng(Hons) MAICD Cert Gov (NFP)

When talking to people about their financial goals, a common question they seem to ask themselves (and me, and I assume their financial planner) is:

How much money do I need to retire?

It’s an interesting question, but it’s not the right question. Read more

Correction, Recession or Depression?

By Lacey Filipich BEng(Hons) MAICD Cert Gov (NFP)

It’s official – China is not indestructible. The 8%+ growth machine has faltered, sending shock waves around the globe. In our own backyard, we’ve seen a sharp decline in the stock market then a small recovery (today anyway). The Australian dollar has plummeted causing widespread happiness for our nation’s export businesses, and my ASX Sharegame portfolio has gone to pot.

So is this the start of Global Financial Crisis version 2.0 (GFC v2.0), or just a to-be-expected blip in the heartbeat of finance?

And whatever the answer, what should investors be doing right now? Read more

The Potential Perils of Paid Financial Advice

By Lacey Filipich BEng(Hons) MAICD

In my professional past, I spent a lot of time flying into mining sites for a substantial fee to tell management teams two things:

  • Your only targets should be Safety, Volume and Cost. The rest is window dressing.
  • Stop doing most of what you’re doing. Just do a few things, do them properly, and be relentless in your de-prioritisation of the distracting crap.

The KPI targets and the contents of the not-to-do lists vary, but the concept is essentially the same everywhere. We have too many targets and too much to do, so we lose sight of the important stuff. It’s part of the human condition.

In my advice to their bosses, I add a third point: the management team bonuses should be delayed by two years. Why? Because they should not reap the rewards of meeting their targets until it can be shown that those results are sustainable and they did not cause long term damage by making poor decisions. Paying them in the same quarter or year as they achieve the targets means they have an incentive to rape and pillage with little thought to the future. It may not be the most significant incentive and it raises uncomfortable issues of trust and integrity, but it’s there.

So what the hell has that got to do with the Senate inquiry into the poor financial advice some of our biggest banks have been giving their clients? Read more

Super and your home do not mix

By Lacey Filipich BEng(Hons) MAICD

When I saw Joe Hockey on the news in March suggesting that superannuation (super) may one day be available to help First Home Buyers get into the property market, my jaw dropped. Could it be possible that our country’s most senior financial decision maker has such a limited understanding of the purpose of super? Or was this simply an off-the-cuff comment aimed at taking the population’s temperature on this issue?

Though it would still make me unhappy, as it’s an irresponsible way to poll opinions, I hope it’s the latter. If it’s the former and Hockey’s understanding of super and what constitutes an asset is that dismal, quite frankly we’re up the creek with no paddle. Read more