Superannuation Funds - How important are fee differences?

All working Australians will have some form of super.  Most of us do not have the time, skills or savings balance necessary for a Self Managed Superannuation Fund so we just go into our employer chosen superannuation fund or another fund of our choice.  These are generally split into retail and industry superannuation funds and all of us would have seen the advertisements on television advocating the superior returns offered by industry funds over retail funds.

Choosing your super fund is not exactly like choosing a managed fund

Super funds most often operate as a fund of funds.  Although some of them are starting to build out their own internal investment capability, most of them actually just outsource the investment task.  That is they pay fund managers (the same people who offer managed products) to invest for them.  Because they are placing such large amounts they can generally do this for quite a low cost.

I have no real preference for superannuation funds which manage the money themselves versus those which outsource the task.  There are pros and cons for both which I will go into in a post next week but they are quite different to evaluate.

If you invest in a superannuation fund that manages money themselves then you will be assessing them in the same way you would assess an ordinary managed fund provider

1. What is the investment process?
2. Who are the people running the fund, how long have they been there and what has their track record been?
3. How stable is the investment team?
4. What sort of alpha are they aiming for?
5. What are the fees they are charging to achieve this alpha (out performance)?

If you are investing in a superannuation fund that uses external fund managers then this is not what you are thinking about.  Fund of fund providers are notoriously

Share Sale Facilities: A great exit opportunity

Occasionally, as an investor, you may end up with a small parcel of shares in a company.  You may end up with this as a result of a share issue by your employer, due to a corporate action in another share you may own or you may even have shares gifted to you.

These small parcels of shares are often annoying...

They are annoying for several reasons

1. They are annoying to sell because trade costs are often fixed up to a certain limit.  
• On a $300 parcel of shares therefore you may be paying ~$30 commission - i.e. you need a 10% return on the shares just to break even
• A friend of mine got an allocation of shares from his part time employer valued at about $300 and he could choose to take them as shares or to sell them through a share sale facility - he thought the shares may go up over time - however he had totally forgotten to take into account the return he would have to get just to make up his transaction costs
2. You may not want to hold them in the first place
• Sometimes a company will spin off a

You should NOT pay more to invest in Ethical Funds

Like many people I know, although I am primarily self interested (i.e. I'm trying to improve my life and financial well being), I am also concerned with how my actions impact those around me as well as the environment.  I think there are very few truly selfish or truly selfless people.  I think everyone falls somewhere between those two extremes.

Although we all try and make a difference, sometimes it is hard to see how "doing our little part" makes a difference when there are such big entities and companies out there who swamp any effort we may have to make a difference.  One of the ways that has become more popular in the last few years is the idea that money talks.  That if you (and a significant number of others) are concerned enough about society then you will direct your savings and investments towards those enterprises which are actually doing good and avoid those which are damaging society or our planet.

It is a fairly simple concept which is incredibly hard to implement for one single reason: We all have different ideas and tolerances for what is good and right. Having said that - if we find a company that we like and believe is doing good then this is where we should put our money.

The Ethical Funds management industry has grown around this concept

A whole industry has grown up around the concept that our investments should reflect our desire to make the world a better place.  The good funds generally provide

FREE memberships cards that you really should have

I think I may be a naturally cynical person - if something is offered to me for free and gives me value for nothing then I wonder what the catch is.  In fact, I almost didn't sign up for my employee share plan because I thought there must be a catch...surely my employer wasn't giving me cash for free!

As it turns out though there are some things which are for free to you but which gives non monetary benefits to the organisations which offer them.  Some organisations extract value from a "loyalty" type scheme - i.e. if they can convince you that the "free" loyalty points you are earning with them are valuable enough then you will continue to use them even though there may occasionally be a cheaper alternative.  Others get value from know what types of products each of their consumers like to buy.

As long as you can remain objective, there are a whole host of free membership and rewards cards that you probably should have...

This is not a complete list by any means.  In fact if you know of other great deals share them below and I can add them to the list. But these are some of the basic free (or very cheap) cards that you should probably have (as an Australian consumer).

• Woolworths Everyday Rewards Card: I have reviewed this card before here.  It costs you nothing, allows you to keep

Keeping it Professional: Your colleagues are not your friends

One of the biggest problems that young people have (especially young professionals) is how to 'get along' or be friends with others at work but at the same time maintain the level of professionalism that you require in the workforce.  This is something that all young professionals should think about but rarely do.

Why do people have trouble distinguishing between friends and colleagues?

One of the biggest reasons that people find it hard to distinguish between friends and colleagues (especially when they are first starting out) is because, for most people, in their previous educational careers, your friends are largely drawn from the group you spend most of your time with.  Think about your friends - where did most of them come from?  The chances are they were from high school or university.

We are used to the idea that we become close friends with and socialise with those we spend the most time with.  We then enter the workforce

Don't be afraid of second hand goods

I recently moved out of home and set up my apartment.  I posted tips on how you could do this without breaking the bank.  I had a goal of $2,000 to set up the whole apartment (excluding bedroom furniture which I already had) and in the end I spent ~$1,500 (which surprised me).  I managed to do this because a lot of the goods I purchased were either a) second hand or b) non branded.

When I mentioned this story to a lot of friends who are getting married or moving out and setting up their own place for the first time I got one of two reactions.  Either

1. Great!  Tell me how you did that and how do I find good stuff? or
2. You bought second hand goods?!  I could never do that!  

I've already told you how you can save money setting up a new place but in this post I am going to tackle the snobbery (for lack of a better term) that some people have when it comes to second hand goods.  

Now let me preface this by saying that if you have a ton of money and have no real need to budget and there is nothing than you are saving for then you're probably going to get nothing out of this.  However if you are like most people the chances are that moving into your own place for the first time (especially if you've just had the expense of a wedding and honeymoon) cash is going to be a little bit

February 2014 Expenditure Tracker

This month was a much more 'normalised' month from an expenditure perspective. Although I didn't save as much as I wanted to because I was paying off credit card debt from last month's expenditures (related to setting up my house) I managed to keep every other account under control.

One of the reasons I continue to track my personal expenditure is that I actually earn a very good income and the one problem that comes with this is that your standard of living and the amount of money you spend typically increases with how much you earn.  This year I have several aggressive financial goals and tracking my expenses and budgeting is an important part of my journey.

Below you can see my detailed expenditure tracker for this month.  As discussed in last month's post I have totally changed the way I track my expenses to give a great degree of clarity on where I am falling behind or am ahead.

Item	Feb 2014	Monthly Target	Perf. vs Target
Accommodation / Living expenses	$2,116	$2,246	-$130
Car expenses	$296	$692	-$396
Health / Well being expenses	$478	$566	-$88
Entertainment / Personal expenses	$1,352	$1,230	+$122
Travel expenses	$100	$675	-$575
Other 'big' expenses	$2,100	$3,508	-$1,408
Savings / Investments	$1,238	$1,051	+$187

• Accommodation and living expenses
• These were just below my target for the month and benefited from lower than normal utilities bills.  My utilities bills (gas and electricity) get charged on a quarterly basis so in months where these do not fall due I would expect to outperform this category
• Groceries were also marginally

February 2014 Net Worth: $485,000 (+1.6%)

	Value	% Change
Assets	$843,000	+0.8%
Liabilities	$358,000	-0.3%
Net worth	$485,000	+1.6%

After a rocky start to the year last month, I have seen some growth in my net worth this month which interestingly did not come from my share portfolio.  My share portfolio was up significantly in the middle of the month however I got a bit unlucky with the timing of some share trades and the portfolio only ended up slightly for the month.  Rather this month was driven by decreased personal expenditure, a paying down of my credit card debt and some savings into short term savings accounts which I will discuss later.

As with last month, my target for this month was a very achievable $480,000 and I am glad to say I have achieved it.  My targeted $550,000 for the year ending June 30 is looking quite unachievable however I will be happy if I can crack the half million mark by this point.  Below I have outlined both the positive and negative factors affecting my net worth performance this month.

Positive Factors

• A large reduction in my credit card debt
• Although I would love to claim that I have finally managed to get my spending habits under control, the fact