Have you ever considered buying shares? Did you know that you (most likely) have plenty of money to do so?
“Playing” the stock market with your Super funds is rad fun.
It is simple to setup and it is a life experience completely riddled with lessons about money, risk, strategy, maths, business, psychology and recognising traits of your own personality.
But mostly it is rad fun.
Most of the new experiences I have undertaken as Downunder Dad I strongly recommend for readers to contemplate for themselves, whether it is yachting, Airtasker, group fitness or making your own chilli jam. However, buying shares inside your Super is NOT something I suggest you try. I do not regret doing so, in fact it is one of the most enlightening and strangely enjoyable adventures that I have ever explored. But I am getting out, and you shouldn’t start.
“…buying shares inside your Super is NOT something I suggest you try. I do not regret doing so, in fact it is one of the most enlightening and strangely enjoyable adventures that I have ever explored. But I am getting out, and you shouldn’t start.”
I have several reasons for winding things up after a fascinating three-year, real-life stock market boot camp.
Scott Pape the Barefoot Investor has helped me to navigate many complex and intimidating financial scenarios, just as he has done for millions of other Aussies. I have been a paid subscriber of his Barefoot Blueprint for nearly five years (and I am rather concerned that it is coming to an end come June 30). Nevertheless, it was Pape’s guidance that gave me the knowledge, confidence and enthusiasm to use a percentage of my hard-earned Superannuation to purchase my own individual ASX listed shares.
Please be advised that nothing in this article or on the Downunder Dad website should in any way constitute financial advice. Seek your own information. These views are my own.
The pending end of the Barefoot Investor information stream creates a transitional period for my Superannuation. Due to a lack of self-assurance in doing things completely on my own, I am essentially selling down some of the shares I have bought inside my Super. This is not too risky because the proceeds are placed back into HostPlus, my low-fees fund.
“…because Super is all about keeping our financial futures safe from ourselves it is clever enough to only allow trading of the top 300 ASX shares…”
Essentially you need to activate an additional feature of your Super account, for mine via HostPlus it is called ChoicePlus (which would be awesome for Kiwis eh?!) It then allows you online-broker-type functionality. However, because Super is all about keeping our financial futures safe from ourselves it is clever enough to only allow trading of the top 300 ASX shares and other stable trading options.
ChoicePlus is very similar to any typical online share broking platform such as the popular CommSec by the Commonwealth Bank. In fact it is identical to those run by other Super funds like Cbus. HostPlus makes the following claims about their ChoicePlus product:
- Easy to use online investment platform
- Trade S&P/ASX 300 shares
- Trade Exchange Traded Funds (ETFs)
- Trade Listed Investment Companies (LICs)
- Buy Term deposits
- Real-time online trading
- Live stock quotes and 20-minute delayed market data
- Comprehensive company and market information
- Independent company research and recommendations
- Investment tools including watchlists and charting
- Investment education
- Consolidated portfolio tax and reporting
- Low administration and brokerage fees
The reporting, research, recommendations and education included with ChoicePlus is all bullshit, not worth bothering with. I find the tracking, graphs and stats a little lacking too. I am a numbers geek and therefore, built my own spreadsheets to keep across everything, well mostly everything.
I started buying my own chosen shares inside my Super fund back in January 2017, so a full three years ago now. In that time my stock portfolio (not my Super) has grown by over $7,000, which sounds great – but calculates at around 6.18% per year.
My performance is well below that of HostPlus themselves.
If you would like a look at the beautiful spreadsheet in full just contact me and I would be happy to share. However, for now here is an extremely brief summary of my transactions:
- Jan 2017 bought QBE Insurance for $12.43 (QBE)
- Jan 2017 bought Woolworths for $24.18 (WOW)
- Feb 2017 bought more QBE Insurance for $12.53
- Feb 2017 bought Telstra for $4.96 (TLS)
- May 2017 bought Select Harvests for $5.01 (SHV)
- Aug 2017 bought more Telstra for $3.87
- Nov 2017 bought NAB for $29.99 (NAB)
- Jan 2018 bought Tassal Group for $3.67 (TGR)
- Mar 2018 bought Woodside Petroleum for $28.73 (WPL)
- Mar 2019 bought Pact Group for $2.76 (PGH)
- Sept 2019 bought Rural Funds for $2.01 (RFF)
- Dec 2019 sold Woolworths for $39.83
Many of you will be able to quickly and easily pick holes in my “strategy” just by looking over the above activity rundown. Nevertheless, it is all lessons learned, every single line.
Just get started
HostPlus were “super” helpful (best pun ever) when I was starting out, they explained everything I needed over the phone and were based in Australia which helps immensely in my opinion. The website is a little clunky by modern standards, however once you know your way around it is easy enough to find what you need. “Don’t just think, do!” When I was done with my Barefoot Investor reading, I dived in.
Play by your own rules
My wife and I agreed that if I was going to do this we would never use more than half of my total Superannuation amount. This simple 50% rule kept me patient as a buyer and comfortable as a husband. I also bought at least $4,000 at a time due to the cost of brokerage (currently around $22) per transaction. As an example, if you bought only $2,200 worth of one stock you would already be down by 1% just to make the trade.
Spread your… wings
Diversification is a term often used in financial circles, particularly regarding advice about personal level finance. From my perspective I like the idea of just owning one mining company, one REIT (real estate investment trust), one retailer, one telecommunications company, one bank (although ANZ is looking juicy right now). My personal fascination in combination with the information I was being fed regularly by the Barefoot Investor membership meant that I certainly learned a lot. There is so much involved with making plastic, growing almonds or farming salmon – it is crazy!
Everybody possesses different levels of risk tolerance and I have learned plenty about myself in this regard and in talking with my wife, about her perspective on money matters too. You need to own your decisions which is particularly important when in a partnership like a marriage, or having dependents. Get rich quick is stupid, getting wealthy over the longer term is where it’s at people! Which leads me to my next and most important lesson…
“Get rich quick is stupid, getting wealthy over the longer term is where it’s at people!”
Dividends are king
You might believe that shares are a gamble and the fluctuating prices are what makes people either loaded or homeless. This is a misconception, the share market is investing not gambling provided you posses the correct mindset. The power of compounding dividends cannot be denied. Whether it is an ETF (exchange traded fund) like Vanguard, an LIC (listed investment company) like Scott Pape’s darling AFIC (ASX:AFI) or a simple individual business like Washington H. Soul Pattinson (ASX:SOL) which has been making profits and paying dividends for over 120 years, the little drops are what overflows the biggest of buckets.
Dividends have helped some of my holdings remain presentable overall despite their price dropping, such as Telstra and NAB. Overall, in three years I have accumulated nearly 400 “free” shares, dividends that are automatically turned into shares and then reinvested, all just for being a shareholder.
“…in three years I have accumulated nearly 400 shares just for being a shareholder.”
And this is what I learned most of all, I love receiving dividends.
I love the simplicity of purchasing an asset (which may or may not go up in value) but pays you regularly just because you own it. Similar to spending $200 on a Monopoly railway station and collecting $25 every time someone else lands on it (but not quite a 12.5% yield!) Or like buying an actual IRL (in real life) investment property and collecting rent, but with dividends there’s no having to pay for burst water pipes or repair works following shithouse tenants. I am a huge fan of collecting and growing dividends, and you should be too.
My next phase will involve buying shares outside of my Super, and I am heading towards that goal without any fear or worry. I am stress free about investing for my family’s future because I know the best way to go about it – a powerful lesson indeed.
“I am stress free about investing for my family’s future because I know the best way to go about it – a powerful lesson indeed.”
I certainly do not know everything, in fact I would not even claim to know a lot. However, I am sure that I know a lot more now than I did three years ago, before I started this exciting, roller coaster ride. I have learned lessons about media coverage, risk, profits, business, financial reporting, communications, annual reports, myself, my wife, my super and MS Excel.
In summary, without the Barefoot Investor by my side I would not stand a chance. And even with his insights and recommendations I still underperformed HostPlus significantly. But my dabbling into ChoicePlus was more about real-life lessons that making mega profits. Moving forward I will sell off my ChoicePlus shares slowly as I feel comfortable, when the timing suits our family’s situation – as I have done with Woolworths.
“I certainly do not know everything, in fact I would not even claim to know a lot. However, I am sure that I know a lot more now than I did three years ago, before I started this exciting, roller coaster ride.”
I will continue to over-contribute to my Super fund from my salary, up to 15% of my wage and we are about to start buying Vanguard shares with post-tax dollars.
I might be able to “earn” 2%pa with an online savings account like ING or Ubank, I might be able to save 3.5%pa off my mortgage, I might be able to pick my own individual ASX shares and continue to generate 6.18%pa. But I believe there is a better way.
As with many aspects of life, there can be powerful benefits in leaving certain things to the experts. Like HostPlus and Vanguard, whose results speak for themselves. So that’s what I am going to do.
HostPlus Performance Summary
Vanguard Australian Shares Index ETF Performance
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