Embarrassing Super Question!!

[dr_jb]

Hey so I've been a bit of a millenial lurker. I've got the gist going for the early Super access during Covid is silly but I've been reading economic blogs and now I'm confused. Can you help me out? Please...

A) Some say it's a bad idea and to hold onto those shares(?)stocks(?)(is their a difference?)...

B) Others say to use it to help get us the f out of the rental market and take advantage of falling housing prices when the time comes.

C) others say invest in the likes of gold, cos the economic system as it stands is about to cave. And gold will go up.

Look, I know many of you may think millenials only care about selfies and avocado, but it's not true. I'd really appreciate some insights.

Thanks.

 

[mmluck]

@dr_jb Tbh, if you’re that unsure what to do, I suggest leave it. Just make sure your super fund is a decent industry superfund like Sunsuper and Rest

 

[darksunshine03]

@mmluck And listed assets may be wise moving forward.

There’s a way you can make VDHG in sunsuper for very low fees.

 

[elizecornforth]

@dr_jb You didn't really ask a question so I'll just elaborate on each of those points including some of my own opinion (so take with a grain of salt).

a) The reason they say this is that (no there's no difference between shares and stocks) Super is one of the most tax advantaged accounts most people will ever have access to. Withdrawing during a downturn especially when you are young robs you of quite a lot of potential for the money to compound over 30 or 40 years. Because of the tax advantages it has even higher potential to compound and grow. I think somebody posted a graphic the other week that withdrawing $20k when you're 30 equals a retirement balance about $140k lower (you will have to look up the exact figures but it was around that ballpark).

b) You might consider this if the main thing holding you back is getting the last bit of money together for a deposit and your income is otherwise high enough to service the loan, taxes, rates and all the other crap that comes with home ownership. But if you have decent income and a stable job then couldn't you save up for a few years more? Why dip into your super if the only real benefit is to buy a house slightly sooner that you would be able to afford in the not too distant future anyway? As you said said prices are likely going to fall... If the plan is relying on withdrawing your super to just eek into a qualifying for a 5% down loan with your parents as grantors and 50% of your income going to repayments for the next 30 years then this is a shit idea.

c) Stay away from those idiots. If the "economic system caves" then gold won't mean squat and hoarding bullets would be a better idea. Whats your (or their) analysis / rationale that suggests its all about to collapse and never recover? Have those people who say this sold all their assets, liquidated their bank accounts and found a cave to hide all their newly bought gold in? I didnt think so. Don't base investment decisions on conspiracy theories.

EDIT: Some formatting.

 

[barry]

@dr_jb B) you're likely not going to qualify for both a hardship withdrawal from your super (you still have to show this even if things have relaxed a bit) and a loan for a house.

My suggestion would be (I am not a financial advisor)
Look at contributing towards the FHSS scheme if you earn enough to to make it worth your while tax wise and definitely want to buy a house.

Or if you don't definitely look at the government co-contribution if you earn under the $ limit. It's basically free money.

 

[resjudicata]

@dr_jb A) The investments that your super fund buys on your behalf have dropped a lot recently. The adage is “buy low, sell high”, which is the opposite of selling now.

B) Lots of people have made money from house prices increasing over the last 20 years. If you buy a house for say, $500k and next year it’s worth $600k then you’ve basically made $100k because you still only owe the bank $500k. But if the price drops to $400k then you also still owe the bank $500k. This is what people call a leveraged investment. At the moment it’s pretty safe to say that house prices aren’t going to go up for a little while, so holding off buying isn’t going to be the disadvantage it used to be, while A still applies.

C) Gold is used kind of like insurance. If the Australian Dollar gets weaker then gold will cost more to buy because it’s priced in USD. If the US economy starts to lose a lot of money then historically people have used gold as a “safehaven”. Gold has gone up against the Aussie peso by about 40% this year. It might keep going up, or maybe the US dollar loses value and an ounce of gold becomes cheaper in AUD. By all means feel free to invest but not more than you can afford to lose.