Moving All Super to Cash

ErlichBachman on 14/07/2021 - 10:32

Hi all

With all of this talk about bubbles about to pop etc, especially by some big name people a lot smarter than me (eg Michael Burry etc) I am thinking of moving all of my superannuation out of their current high growth index investment, to cash for the next 12-18 months.

The growth over the past year has already been phenomenal and I'm thinking even if I miss out on some extra growth if this all continues then if it pops before I reenter I could potentially be in a very good position to rebuy back into high growth index later on. Of course I don't profess to be able to time it that's why I think 12-18 months is probably wiser and reassess then.

I just can't help but feel something has to give - there is so much crazy (imo) money out there atm and it's like covid hasn't even been taken into account, the governments around the world just continually printing money to try and keep things afloat. It can't continue to go on forever surely.

Just wondering what other people's thoughts on this are please (of course I understand this is just other people's opinions and not to be taken and acted on as financial advice, do my own research / speak to a professional etc)

Thanks

Financial

Comments

  • Bid Sniper on 14/07/2021 - 10:36
    +72

    Cash is trash

    • johndowy on 15/07/2021 - 11:05
      +6

      Op giving us his/ her age would help a lot.

  • jv on 14/07/2021 - 10:41
    +85

    Moving All Super to Cash

    LOL

    • JDMcarfan on 15/07/2021 - 15:00
      +2

      OP might as well move to a monastery in Tibet

    • Budju on 15/07/2021 - 15:28
      -5

      You actually sound lile a fool lolling at that proposition

  • jv on 14/07/2021 - 10:43
    +8

    the governments around the world just continually printing money to try and keep things afloat.
    It can't continue to go on forever surely.

    Why not?

    • Lord Fart Bucket on 15/07/2021 - 12:05
      +7

      Eventually we will run out of ink?
      /sarcasm

      • jv on 15/07/2021 - 14:30
        +4

        Make more

        • McFly on 15/07/2021 - 17:00

          Buy more.

          • Scope on 16/07/2021 - 01:54

            @McFly: By printing more?

            • Yawhae on 16/07/2021 - 08:23
              +1

              @Scope: They said bitcoin was the next currency. We weren't prepared for DRM printer ink.

            • SnakeCasablanca on 16/07/2021 - 10:17
              +1

              @Scope: I could answer that… For money!

      • chasis on 16/07/2021 - 18:36
        +1

        Put money into ink

    • MontyMacaw on 15/07/2021 - 15:42

      How many businesses don’t have debt? They borrow to grow. Governments do the same. Debt isn’t always bad. It just feels like it. Without debt almost nobody would own a house. So yes they can keep on printing money as long as it is managed properly.

      • jv on 15/07/2021 - 15:43
        +4

        They borrow to grow. Governments do the same.

        Treasury can also just print more money.

        • MontyMacaw on 17/07/2021 - 08:06
          +1

          It doesn’t quite work like that.

          • jv on 17/07/2021 - 16:08

            @MontyMacaw: Yes it does.

            They control the mint and how much gets printed

      • dimes on 17/07/2021 - 09:19

        Yet debt is the reason property prices are so sky high

      • Ruckmauler on 17/07/2021 - 13:28
        +2

        No - just as many people would own houses - they’d just be a LOT cheaper - and would that really be a bad thing?

  • bobbified on 14/07/2021 - 10:44
    +19

    Everyone handles risk differently - some people are more risk-adverse than others.
    The most important thing is to make sure you're making an informed decision (ie, you understand the risks and everything that goes with your decision/s).

    (If you come back here in 12-18 months and whinge about your Super fund having crap returns because you invested in "Cash", I'm sure you'll get some "interesting" responses!)

    • Muzeeb on 14/07/2021 - 10:52
      +14

      risk-adverse

      This sounds unfavourable

      • bobbified on 14/07/2021 - 10:56
        +3

        OP sounds like he's shying away at potential risk of some "bubble" bursting because 'some big names people' have said so.

        • Muzeeb on 14/07/2021 - 10:59

          this?

          • bobbified on 14/07/2021 - 12:36

            @Muzeeb: I'm not the most awake person today so you might have to give me a few more hints at what you're trying to say lol

            • Muzeeb on 14/07/2021 - 12:44
              +10

              @bobbified: Averse vs Adverse.

              I'm just being a twat.

              • bobbified on 14/07/2021 - 13:07
                +3

                @Muzeeb: LOL! My english is no good! 😁

                (Good you actually told me though, otherwise I would've just kept wondering and wondering! 🤣)

                • virhlpool on 16/07/2021 - 22:23

                  @bobbified: Wondering while wandering is always good for learning.

              • Mechz on 14/07/2021 - 13:10
                +15

                @Muzeeb: At least you're being pacific and not just rambling about anythink.

                • brendanm on 14/07/2021 - 19:58
                  +7

                  @Mechz:

                  anythink

                  Aaaaarrrrrrgggggghhhhhhhhhh!!!!!

                • Miss B on 15/07/2021 - 01:05

                  @Mechz: It was helpful of them to point out that averse is different then adverse. It would of been better if they was clearer from the start though.

                  • john71 on 15/07/2021 - 10:32
                    +3

                    @Miss B: So it would 'of' been better?

                    Nice to know.

                    • Miss B on 15/07/2021 - 12:11
                      +3

                      @john71: You missed the other two intentional ones (and potentially any number of unintentional ones).

                      • john71 on 15/07/2021 - 12:19
                        +1

                        @Miss B: Thanks - right over my head!

                • pn09 on 15/07/2021 - 08:21

                  @Mechz: sorry - replied to wrong post

                • pn09 on 15/07/2021 - 08:22
                  +1

                  @Mechz: Jeez dude …. it's anyfink ….

              • john71 on 15/07/2021 - 10:31
                +1

                @Muzeeb: No you're not.

                People who make these sorts of mistakes betray either a lack of education or a lack of attention to detail.

                I struggle to imagine circumstances where these would be considered personal attributes.

                • Muzeeb on 15/07/2021 - 11:02
                  +1

                  @john71: Bone apple tea

                • bobbified on 15/07/2021 - 17:45

                  @john71:

                  People who make these sorts of mistakes betray either a lack of education or a lack of attention to detail.

                  Thank you Mr Master(bator) of English! 😁

                  • john71 on 16/07/2021 - 08:59

                    @bobbified: You Ingrish not so good.🙁

                    • bobbified on 16/07/2021 - 10:07

                      @john71: They're are lots of different people here and there edu-muc-ation levels will vary. Their are other languages too, so not knowing all the bits and pieces of english doesn't mean they "lack education".

                      Your obviously not being very fair here. If you disagree with this, please advice.

                      (Did that almost give you a brain explosion? 🤣)

  • Muzeeb on 14/07/2021 - 10:45
    +6

    Go for it

    !RemindMe in 18 months

    • Chandler on 14/07/2021 - 12:12
      +3

      Reddit is this way → Reddit 😛

  • pformag on 14/07/2021 - 10:46
    +10

    Aust Super returns for 20/21 was 20.43%.

    • onetwothreefour on 14/07/2021 - 10:49
      +4

      For cash? That's what the balanced investment portfolio returned. Cash was 0.15%.

      • pformag on 14/07/2021 - 10:52
        +4

        Yeah for balanced, it was an argument against cash. :)

    • brad1-8tsi on 14/07/2021 - 12:23
      +1

      qsuper
      International shares. 35% return
      Aus shares 25% return

      50:50 split is $2.50 management fee per $1k balance.

    • sauce2k on 16/07/2021 - 00:27

      Their balanced fund is not a true balanced fund if you look @the allocations. Hence the higher return

  • apsilon on 14/07/2021 - 10:51
    +7

    How soon are you going to be eligible to access it? If you're retiring in the next year or so then it may make sense (though keep in mind you'll effectively be taking a loss as cash is about the worst possible investment right now though obviously safe) but if you're 20 years away then IMO you'd be better to just ride out any potential temporary down turn.

    • netjock on 14/07/2021 - 14:07
      +2

      And the tech bubble of 2000 never happened

    • cloudy on 15/07/2021 - 20:01

      Read your reference.
      Do you guarantee that your data is correct?
      No. While we would say our data is very reliable we can not guarantee that the data is free from errors and omissions.

      Burry is a private fund, I don’t believe your comparison for a second.

      • DvApps on 15/07/2021 - 22:12

        Burry's fund still files all trades each quarter with the SEC, which are public.

        • cloudy on 15/07/2021 - 22:15

          Assuming all he invest in is governed by SEC…which is incorrect.

  • pharkurnell on 14/07/2021 - 11:02
    +6

    Keep it in a shoe box under your bed. Its better off there.

  • brendanm on 14/07/2021 - 11:07

    I did this at the start of covid. Converted back to Australian and international shares near the bottom, made good gains.

    • idonotknowwhy on 15/07/2021 - 09:38
      +14

      Good luck timing the market well repeatedly over the next decade ;)

      • brendanm on 15/07/2021 - 09:42
        +1

        I don't plan to, just when something is blatantly obvious like that. When there is worldwide media hype about the doom of the economy, people are going to panic sell. Once you see that there isn't going to be the doom and gloom that they are talking about, even though they keep saying it, you buy back in when it's fairly low. You don't have to get the very top or the very bottom, a gain is a gain.

        • john71 on 15/07/2021 - 10:35
          +12

          You come across as someone who's mighty proud of having picked the right lotto numbers.

          • brendanm on 15/07/2021 - 11:04
            +2

            @john71: Not sure how that is picking lotto numbers, it's not exactly rocket science. The market is up and down, a pandemic and massive media beatup is obviously going to cause it to go down. When it's gone down a fair bit, get back in, only a matter of time before it goes up, as has happened forever.

            • Blitzfx on 15/07/2021 - 12:25
              +2

              @brendanm: We have 100 years of historical data of the stock market index, but it's pretty apparent people don't take advantage of information that is freely available, literally at their fingertips.

              There's complete random-chance luck and then there's 100% predictable gambling, where the payout is some double-digit positive return in the space of 1-2 years.

            • SlickMick on 15/07/2021 - 14:02

              @brendanm: Picking lotto numbers would be as hard as picking a market turnaround, but I reckon I'd do far better picking between red and black.

              All 3 are mugs games, you might win on a lucky day, but in the long run you will lose.

              Investor 101: it's all about time in the market, not timing the market. I can remember the graphs showing how much you lose by missing the first day or so of a turnaround.

    • SlickMick on 15/07/2021 - 13:41

      I bought Corporate Travel at the start of Covid - did far better than selling.

      …disclaimer: I also bought Virgin Australia bonds.
      It turns out Covid is serious - who'd have thought :(

  • Drakesy on 14/07/2021 - 11:08
    +6

    There were people who did this at the covid dip, missed out on it returning and surpassing where it was before.

    I'm of a similar mindset, however looking at gold as my hedge rather than dumping it in cash.

    • justabargainhunter on 16/07/2021 - 13:05

      Drakesy - interested in your views on gold as a hedge. Historically it does well as a hedge, although the reason on why it does well I don't understand. Any insight?

  • StinksGoDown on 14/07/2021 - 11:30

    It might be a winning trade if you think we are going into a repeat of the Spanish Flu's Deadly Second Wave.

    This is because the Delta variant could be that equivalent second wave that destroys productivity around the world.

    Not to mention all this scaremongering in the media means that the second, third, fourth, fifth waves we had were not really genuine waves as the virus did not evolve to become more dangerous.

    • netjock on 14/07/2021 - 14:14

      Spanish flu killed a lot of young people - decreases number of workers causing higher wage inflation

      COVID19 will kill a lot of older people - therefore transfer of wealth from old to young people

      • ChickenTalon on 15/07/2021 - 08:40
        +1

        Covid will evolve to infect and kill younger people too. It’s inevitable, there is so much evolutionary pressure on it with populations split vaccinated and in vaccinated.

        Covid is at the very start of its evolutionary journey.

        • choosk on 15/07/2021 - 09:22
          +3

          It looks like it already has… see increasing numbers of younger people in hospital due to delta strain.

        • netjock on 15/07/2021 - 11:28
          +1

          Not saying it won't but we are not 100% sure how this is going to play out. Delta strain is pretty scary as it can be passed very easily it seems.

          • ChickenTalon on 15/07/2021 - 13:45

            @netjock: There will be more and more variants emerging, they will be more and more spreadable. You can't stop evolution.

            • ImpulseMan on 15/07/2021 - 14:29

              @ChickenTalon: History suggests a pandemic lasts around 4 years at most.

              You have seen the most amazing race that human kind has won with the first vaccine developments.

              You have much high chances of inflation, interest rate increases and bubble bursts causing the next 'crisis' vs the virus mutating.

              • netjock on 15/07/2021 - 14:53
                +3

                @ImpulseMan:

                You have much high chances of inflation, interest rate increases and bubble bursts causing the next 'crisis' vs the virus mutating.

                Correct.

                Governments have backed central banks into a corner. The last 2 busts (tech and GFC) have been built on bubbles built on bad foundations (tech companies with zero profits and property that we cannot afford with it jobs that cannot be sustained).

                Most developed countries have outsourced their manufacturing to China which have reduced inflation (they can continue to shift to other low cost countries in the future) but the problem is no manufacturing jobs. China is now a problem, if the west outsourced all their manufacturing to the USSR the USSR wouldn't have collapsed either.

                Next crisis would probably be a government debt crisis as a result of COVID19. All government are in so much debt any adjustment of interest rates would make them go insolvent overnight. They can tax their population more but everyone is so deep in mortgage debt people would go bankrupt too.

                Inflation: if you look at GDP growth and price trends we're probably just catching up to pre COVID19 trend. If we overshoot then might be different.

                Central bank money printing: most of it is given to banks to lend out. People can only get it if they are credit worthy borrowers which is a lot different than just depositing amount into people's bank accounts whether they need it or not.

  • blueyez on 14/07/2021 - 11:35
    +6

    Only if you are close to retiring - otherwise you will kick yourself for missing out if/when the market recovers.

    Seek your own financial advice as I'm not an advisor, just giving my opinion.

  • avoidfullprice on 14/07/2021 - 11:40
    +2

    You and your mum are in different situations.

    Having some defensive asset in super is a good idea. But with long term investment, is time in market not timing the market. Do you have a strategy when you will move out of 100% cash? If the price is even higher in 12-18 are you still going to buy?

    Maybe a halfway point is divert all future contributions to defensive asset and leave the current investment alone.

  • lubos on 14/07/2021 - 11:43
    +2

    You should watch this video before you do it.

    https://www.youtube.com/watch?v=YRG09ou9q1E

    Are you telling us, you will be buying shares when the market is crashing and everybody is running for exists? Give me a break.

  • Stopback on 14/07/2021 - 11:49
    +1

    Gold at least

  • saitaris on 14/07/2021 - 11:54
    +15

    A friend of mine converted all of his super to cash just before the big market dive last year. He was very smug about it, proclaiming that it would take "10 years" for super funds to recover after the crash that came. Well, a bit over a year later my fund which I never touched (High growth index) is now substantially ahead of where it was pre-crash. He has gone totally silent on the matter, which suggests to me he missed out on much of the incredible recovery the market had by not converting his cash assets back to growth assets in time.

    But I'm only mid-30s, I can ride out even large market crashes without much concern.

    • skid on 14/07/2021 - 12:01
      +3

      He based the 10 years on the past (GFC 2008) and past performance is not indicative of future performance.

  • Autonomic on 14/07/2021 - 11:58
    +5

    You can't predict market movements. Don't touch it.

    • tomlikesbeetroot on 15/07/2021 - 01:51
      +10

      There are 2 things that can be predicted about the market with a fairly high degree of certainty.
      1. At some point a long time in the future it will be higher than it is now
      2. There will be variance along the way, with some ups and downs.

  • skid on 14/07/2021 - 12:04

    The bubble will not pop unless there is a crisis. There won't be a crisis unless there is a reason for policy change. Not advisable to change to cash as you will be going backwards.

  • brad1-8tsi on 14/07/2021 - 12:30
    +9

    Time in the market will beat timing the market any day.

    At the very most I'd drop back to what the funds usually describe as "moderate" option. Around 50% in cash / bonds/ fixed interest, 20% in equities and the rest in property, infrastructure, commodities, etc

    • FrugalFranky on 15/07/2021 - 11:31
      +1

      THIS

      Time in the market beats timing the market

      If you are getting worried, I would say any NEW super contributions be put into a low risk fund, that way you are hedged against any drops.. which may never come..
      In the history of investing, every 5-10-20-50% drop has always rebounded. It will happen again.

      Me personally am not changing my strategy. I have emergency cash available, that if/when my super/stocks drop 10-20-50% I will be buying more and more.

  • newjerseydamo on 14/07/2021 - 14:06

    Seek professional financial advice.

    • Mrgreenz on 15/07/2021 - 09:52

      Well that would depend on which financial advisor you would speak to.

      Some will say its a good idea, some will say its a bad idea.

      Pointless comment

    • SlickMick on 15/07/2021 - 14:14

      far better advice here - simply filter out the 2 boofheads suggesting OP's idea is sound.

  • netjock on 14/07/2021 - 14:12
    +1

    With all of this talk about bubbles about to pop etc, especially by some big name people a lot smarter than me (eg Michael Burry etc)

    You got to ask what is in it for them? Because with all this good free advice how are they going to feed their family. Michael Burry didn't tell us before the GFC and got us all into those winning trades he setup.

    I recently saw Mr Rich Dad Poor Dad talk about a market crash and how he bought BTC at 9k and not going to sell. Some of these people are just sticking their neck out to increase their profile.

    I just can't help but feel something has to give - there is so much crazy (imo) money out there atm and it's like covid hasn't even been taken into account, the governments around the world just continually printing money to try and keep things afloat. It can't continue to go on forever surely.

    Also why people are not in cash and buying up assets.

    • Some Guy on 14/07/2021 - 21:07

      "Also why people are not in cash and buying up assets."

      Because cash is so cheap so funding the debt/assets is easier.

  • robbyjones on 14/07/2021 - 14:23

    A lot depends on your age. Moving money to cash for such long time isn't wise, in my opinion, unless you are close to retirement age and don't have a lot in Super. I am retired and don't have any money in my Super account in cash, I moved it from high to medium risk when I retired and i'll leave it there. I lost a small fortune, on paper, at the beginning of Covid but it has come back stronger than before. My suggestion to you would be to move it to medium risk, or low risk if you are really conservative, but not cash, at least not all of it.

    • netjock on 14/07/2021 - 14:31

      Good example.

      If you had $1m dollars in the ASX200 which is paying 3% dividend then it is survivable just on dividends. During good years when the market is going up 7% you would have taken $70k a year and put $10k aside for the once in 7 year bust.

  • elcheapo1 on 14/07/2021 - 16:19

    What if the market begins to crash in 18 months time?

    What I would do is keep it in Super until the crash actually happens. Get it out early. Put it back in as the markets pick up again.

    • robbyjones on 14/07/2021 - 16:59
      +9

      We'd all be rich if we could pick this with accuracy

    • apsilon on 14/07/2021 - 17:09
      +1

      It takes several days for changes to be made once you place the order. If you wait until it actually crashes you'll likely be changing over at or very near the lowest point meaning anytime you change back you'll be buying higher than what you sold for. You really need to pick it in advance but near the crash and that's the trick.

    • Some Guy on 14/07/2021 - 21:12
      +1

      I think a similar strategy for shares would work. Buy when the cost is low and hold until the price increases. Then sell just before the price goes down again.

    • SlickMick on 15/07/2021 - 14:21

      sell on a crash, buy on an uprise? That's the classic buy high, sell low.

    • brad1-8tsi on 15/07/2021 - 21:56

      For the FY ending Jun 2020 my personal super fund made 1 units.
      For the FY ending Jun 2021 my personal fund made 125 units.

      I'd be so annoyed if I'd missed the 250 units.

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