Here’s another knee slapper. John Brogden, the new director of Australia’s for-profit superannuation funds management association, wants mandatory super contributions increased from 9% to 12%. Brodgen heads the Investment and Financial Services Association (IFSA).
Talk about getting on the front foot. Actively managed funds have not exactly had a stellar few years. And as we reported last week, there’s some doubt as to whether the funds, on average, can ever actually beat the market. Increasing compulsory contributions might be a way to make up for revenue you’ll miss out on as those that can choose to move to self-managed funds.
Frankly, though, the whole idea of not having a choice about super reminds us of the ant colony in T.H. White’s “The Once and Future King.” In the ant colony, there is very little choice. Everyone has a role defined for him and even language itself is limited. The smaller the vocabulary you have, the more difficult it is for you to articulate your dissent.
The rule of the ant colony is that “everything not compulsory is forbidden.” How much does that sound like the Nanny state we are living in? The government is not only intent on telling you what you cannot do (smoke, drink, eat like a pig) but what you must do under penalty of law (surrender your income to be managed by someone whose financial interests are not aligned with yours.)
We’re not saying that laying up savings for a rainy day isn’t a good idea. It’s a great idea. In fact, it’s so important, we’d suggest it’s not the sort of decision you should surrender to anyone else. Preparing for your financial future is ultimately your responsibility because you’re the one that’s going to live that future, not your fund manager. If you don’t have your own wealth game plan, odds are you’re going to lose the game.
What that game plan includes depends on your appetite for your risk, and, of course, your view on the markets and your investment time frame. But these are not complex issues beyond the capability of ordinary people to discuss and plan for. They are the sort of things we should all specialise in if we want to make, grow, and keep our money-money that plays a part in whatever kind of life we choose to live.
If we’re a bit philosophical today it’s because we’re recovering from a weird ailment. Our colleagues call it the Darth Vader Diet. Last week we woke up to a constricted esophagus. It made it very hard to swallow. At first we thought it affected our breathing.
But once the panic subsided, we realised it was some sort of spasm in our esophagus, like a cramp making its way down our throat (it’s just above our stomach at the moment). It’s been dubbed “the Vader diet” because it’s like Darth Vader is squishing our throat because he finds our lack of confidence in the stock market disturbing.
In any event, we’ve been forced to a mostly liquid or mushy food diet so nothing gets lodged in our throat while it’s sill crook. It’s a good weight loss method, despite the discomfort. And it makes for a clear-if somewhat whimsical head. Hopefully the antibiotics and donuts will kick in and fix things up soon. Until then…
for The Daily Reckoning Australia