Moving All Super to Cash

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

Comments

  •  

    May be only selling the assets that you think have peaked or are close to peaking is a good idea, not everything.

  •  

    I highly doubt the growth in your super of the past 12 months is anything more the market bouncing back from its COVID lows. Translation - unless you converted all your super to cash prior to March 20', all your are seeing is super regain what it lost in March 20'. Most super funds didn't do anything special, apart from ride this roller coaster during this period, just one funds mix performed slightly better than another during the past 12 months.
    Should you wish to convert to cash, then it is your call as you need to be comfortable with it, don't expect all the sheep to follow you as it is a risky choice, which is rarely successful, unless that is you have some insider knowledge, or just time it extraordinarily well, that is why the super funds just ride the troughs out.
    Some people read the warning signs leading up to March 20' drop, converted to cash prior, then reinvested when the market started growing again and made good gains, but the majority did not.

  • +1 vote

    If you're 100% equity today and considering moving to 100% cash then it sounds like your asset allocation doesn't match your risk appetite. Consider diversifying so that you are not so exposed to share prices. Pick a mix of shares, bonds, gold and cash that let you sleep at night.

  • +2 votes

    Unless you're near retirement age, dont touch your damn super.

  • +4 votes

    Why do people ask for tailored financial advice then provide no information about their situation?

  • +14 votes

    Your trading strategy requires you to get it right twice. Sell shares now and then buy back in at a lower price.

    Meanwhile you will miss out on 18 months worth of dividends which could be worth say 7.5% (2.5% dividends every 6 months).

    Your cash up strategy relies on you being able to buy back in at share price that is 7.5% lower than current prices.

    This might happen but it is speculation.

    The good news is that if you are right then you will be able to lord over all of your friends, family and fellow Ozbargainers for the next 2 years about how clever you are.

    If you are wrong you just shut up and don't talk about it.

  •  

    If you move all super to cash I before pandemic, then move all cash to super at the end of last year, you would have made a lot.

    • +2 votes

      I mean yeah, you can make a lot if you perfectly time almost any investment. The problem is the timing it.

    • +2 votes

      Hindsight is a wonderful thing. In reality most lose money trying to do this sort of thing.

    •  

      If you pick the right numbers and then buy the lottery ticket you will make a lot of money.

  •  

    snap, crackle and POP……….

  •  

    Particular sectors will do well in different scenarios. Commodities at the moment are booming which is helping australia. I don't know that 100% cash is a sensible investment with possible increase in inflation. Maybe try to pick one or two sectors that might do better given your expected scenario. I think big technology stocks are well placed? Environmentally aware investments? I have always been Balanced in super (which has an element of cash anyway)… maybe it is time to think about changing from balanced but inertia has done me well in the past and I am lazy and will probably end up doing the same. It is good you are thinking about such matters.

  •  

    Depends on when you need your super? Do you need all or most of it in the next 10 years? Then it might be worth locking in the current value as you may not recover from any crash, should one happen.

    If you don’t need it soon then it’s probably best to ride out any bumps and try to forget about it. Ignore the stories of people being smart and moving their money around. For everyone boasting about constantly switching between cash/gold/property/shares there’s probably two people keeping quiet because they (profanity) it up.

  •  

    We are perilously close to negative interest rates on savings in this country, you will end up paying the bank to keep your funds. If that happens I can see a flight to super/stocks to protect against capital shrinkage.

  • +1 vote

    Rule of thumb

    Bubbles don't pop when everyone is talking about them
    In fact that's the least likely time it will happen.

    In fact the top of any asset class has rarely been called by anyone so i would ignore any of these calls.
    They are made regularly from attention seekers

    Bubbles pop when everyone thinks the market will rise forever and everyone wants to get a piece of the action.
    Hence usually people get caught in the rush out the doors

    •  

      Pretty close to the blow off top, just needs a bit more mania

    •  

      Bubbles pop when everyone thinks the market will rise forever and everyone wants to get a piece of the action.

      Like now?

  •  

    You mean the obvious desperation of a group of people who shorted the entire market trying to convince everybody it's going to crash?

  • +2 votes

    you've actually already hit the nail on the head as to why assets are going up so quickly

    "the governments around the world just continually printing money to try and keep things afloat".

    I read somewhere that 25% of the world's major currencies were printed since the start of 2020. Diluting the value of fiat and hence the rush to buy up assets

    will the property and stock markets pop at some point? quite possibly, but the issue is when. If it pops 2 years from now and has gone up another 30% then it might not even fall back to today's prices.

    Super is a long game. I'm assuming you won't need it for another 30years or more. I wouldn't mess with it too much. Set it to a conservative strategy if you're worried

  • +3 votes

    How old are you, OP?

    If you are nearing retirement, e.g. in your 60s, it would make sense to move to a lower risk investment strategy.. cash is low risk but it's also not really good enough. You can move to other options like bonds and still retain a % in lower-risk shares.

    If you are young, keep it in aggressive and ignore it, wait 30 years and it'll be worth way more than if you try to time the market. Time IN the market > timing the market.

  •  

    Trying to time the market might be more risky then the potential loss?

  • -1 vote

    The moment stocks went down I transferred all into Hight Growth - and making a killing.
    The world is opening up, and will explode with a hive of activity. This will certainly be reflected in your portfolio.

    Cash is doing nothing.

  • +1 vote

    LOL 😂

  •  

    Markets are cyclical. Super is designed to fund your retirement. Depending on how old you are moving all to cash could well impact your portfolio for when you retire.

    If you have a well diversified portfolio then it would mitigate some of the risk (not all). Your 12-18mth view should not be main factor unless you are planning to retire in that time frame of have a specific goal for your funds by then. If you can’t access funds then (meeting condition of release) does it even matter?

    I would advise you to speak with your financial adviser or seek proper financial advice if you don’t have one. They will review your risk profile, your investments and your financial goals and objectives.

    Even a qualified financial planner in the forum would not be able to give you good advice without fully knowing your situation.

    (I work in the industry)

  •  

    PS cash rates are at record lows. Are you sure you want to park all your super money there? Even a term deposit would be better (marginally better) then cash.

    Call your super fund and find out what the cash rate is or read the Product Disclosure Statement.

  • +5 votes

    I would not do this. At most move 20% to cash on hand, if that's what you really want to do.

    Why? For the reason you said above. There are people smarter than you that don't know what is going to happen. So why would you put all your eggs on one guy's opinion.

    If you watch the move about Michael Burry you would note that while he 'predicted the housing crisis' it took some time to occur from his initial positions. He didn't time it well. If he couldn't hold his positions he would have been wiped out.

    Bubble predictions are pointless unless you have a specific date for a pop.If you don't have a time machine, you don't have a date.

    Recently saw a video of someone explaining this well as follows:

    If you invested $10,000 in the last 20 years you would of had $30,000 by today.

    But if you missed the best 10 days of trading over the same period you would have only $15,000 by today.

    If you missed the best month you would have $6000 to your name.

    And 6 of the 10 best days were 2 weeks after the worst days.

    Food for thought.

  • +2 votes

    People look at this the wrong way. All this recent growth in paper wealth means little. The middle class has stayed relatively the same level of wealthy compared to each other, and that is what actually matters when supply and demand drives what you can afford to buy with that wealth.

    Stay "at the market" and it doesn't really matter what your absolute wealth is. For example, if your house value drops 50%, so does everyone elses, and you can still afford the same equivalent of what you can currently afford.

  • +2 votes

    Yep, the market always recovers. I did it before in March of 2020. Waited for an even bigger dip, which didn't happen, so got in again just before it went past 6,400. Lucky I did.

    What did I learn? If you're not touching it for the next 30 years, leave it alone. I went high growth.

  •  

    You lost me at Michael Burry. So if you are worried about your super then go to cash. I’d be more interested in Warren Buffet for my yardstick. Compounding interest by investing in intrinsically valued companies wins in the long term EVERY TIME. The pumping of money into the world is actually making cash a risk on its own. It won’t stop anytime soon because the whole world is doing it. But like I say if you listen to occasional headliners like Michael Burry then you deserve to be in cash. No offence intended.

  •  

    One of the best sayings I know about owning shares is: buy at the knee and sell at the elbow.

  • -1 vote

    DO IT

    •  

      negger please

  •  

    Ask the bozos who went to cash last year, or during the last 'crash' or at any time really. You have to be right when you sell and right when you buy back in again.

  •  

    OP there is many questions I could ask you to establish your situation and where you are coming from. In terms of switch whole super to cash based on predictions and marco factors i would say…. you would be wiser to switch to cash on CONFIRMATION not SPECULATION… i.e. the market (US) and ours are not going down currently in fact they are at all time highs or thereabout jumping off at the top might look smart in hindsight or it might not. the trend is your friend… if you were thinking about this play you should be looking for some actual confirmation in the major indexs and currently there is none…. trying to time the market pure and simple and this is not even based on technical analysis just pure crystal balling it. i would advise against it

    have a look what happend in Japan in the late 80s etc the market was overvalued and continued to go up for 3 years before it crashed. I am not saying US or our market is or isnt overvalued but think about that scenario a bit. if your not comfortable with your super balance have a think about adjusting the allocations but in my opinion going full cash is quite an aggressive move (and unnecessary)

    some elements of your theory dont add up… printing money pushes asset prices up not down……. the RBA recently announced their QE 3.0 which is virtually unchanged from 1.0 and 2.0…… the status quo is remaining…….. re: moving to cash .. even if you are right… you are too soon , so going back to my original point you would be best served waiting for confirmation of your thesis to start occurring than trying to be the first to sky dive out of a plane at 30,0000 feet.

    if you cant sleep at night or this is troubling you then clearly your over exposed in your allocation to local or global equities so tinker with the percentages until you are more comfortable (assuming you have the right low cost fund that will allow you to do so)

  •  

    OP you can read this article (or download) it…

    https://www.gmo.com/australia/research-library/waiting-for-t...

    it did scare the pants off me in early January 2021..look where we are now its JULY and markets have continued to march onwards…

    my advice be alert but not alarmed… and have a strategy ready

    for what its worth, i did not act on the article, but as above … increased or maintained my overall 'alertness'

    in my opinion you may be placing too much emphasis on what is happening locally.. this is not March 2020… markets have held their nerve thus far… key difference we have vaccine now and maybe 80% vaccinated by years end if you believe the media/predictions… this is not the situation in most other countries and the world is opening up

    recent unemployment number is 5.0% here 0.1% lower than the 5.1% previously and lower than pre pandemic levels…

    its a setback whats going on and terrible but no need to panic / overreact

  •  

    I am not sure if I am right here but adding my thought anyway..

    Wouldn't logic dictate that when money is being printed by governments at will without regard for the long term, that the value of money itself and cash be set for a dramatic drop in the future?

    I feel like it's already happening. How else would you explain the 20+% jumps in property prices, more in shares and crypto during COVID.

  • +1 vote

    When an amateur investor (most of us) get caught up in the 'bubble talk' it very rarely is the time it pops.. As for Michael Burry he is almost a one trick pony, and as they say a broken clock is right twice a day
    https://markets.businessinsider.com/news/stocks/michael-burr...

  •  

    Right now the worlds financial markets are in a kind of 'buy everything' mode. How long it's going to go on for, who knows? There's the possibility this could go on for years or pop tomorrow. I'm betting it will go for a while, correct a bit then keep going. Momentum is a thing. If you're getting a bit sweaty you can always move a portion of your super in to cash.

  •  

    Perhaps just take some profits and put that in cash? You could leave the rest as is then reinvest when the market drops.

  • +1 vote

    Wow thank you so much everyone for all your thoughts and replies! I'm honoured for this to have made it into the hot topics section of the site too!

    For context I'm mid 30s so time is definitely on my side and I appreciate all the comments but the one that resonated the most was time in the market trumps timing the market (at which I'm no expert).

    For now I have switched everything over to hostplus balanced index which is a bit more defensive than my previous position but still promoting growth, without getting crazy and parking it all in cash on the sidelines.

    When vanguard super finally comes to Australia I'll see what their offering are and reasses my super situation then. Ultimately I want to be in high growth I am just spooked with all of this bubble talk but again time in market should trump timing the market.

    Thanks again for all your responses!

    •  

      So in your opening post when you said 'cash' you mean 'cash investment strategy within Super'.

      Yes, you should switch to the investment strategy within Super that matches your personal risk attitude.

      Previous performances of the investment strategies in your Super should be available. You should read it.

      There might be some 'calculators' that quiz you on your risk position then recommend what investment strategy matches. I know NGS super has one.

    • +2 votes

      Michael Burry said that 'meme stocks' were set to crash - https://www.cnbc.com/2021/07/01/michael-burry-reportedly-say... the enitre market.

      I too am invested in Hostplus Balance Index and will probably keep it there for decades, continuing to salary sacrifice additional contributions.

      Below is a summary of how my super has grown over the past 10 years (i switched to Hostplus balanced Index about 4-5 years ago). Keep it in one place, set an automatic contribution, and only check it every few months. If there is a dip (i.e. COVID-19) then contribute a more during the dip and you'll come out the other side in a better position.

      FY Balance
      Jun-10 29,858
      Jun-11 40,343
      Jun-12 50,520
      Jun-13 71,709
      Jun-14 96,060
      Jun-15 127,693
      Jun-16 136,798
      Jun-17 167,527
      Jun-18 198,255
      Jun-19 221,000
      Jun-20 248,000
      Jun-21 314,000

      • +1 vote

        Your balance and growth are very similar to my own over the period…same strategy, same super fund. I changed about 18 months ago to their Choiceplus option just to have a bit of additional control, which has improved my returns.

        •  

          How has additional control improved your returns? What actions did you take?

          •  

            @SydneySwan: Probably the main bit is I feel more responsible for the shares, than what I would have, had I just left it to the fund managers. I read more these days so take a lot more interest in what is going on around me.
            Soon after switching to Choiceplus, I decided to convert to cash in early Feb 2020, as I could see issues in China based on various information I had received, I was only expecting a 5-10% dip to be honest.
            Once the marked plunged I went all in, in late April trading in the ASX200, mainly targeting shares that had been hard hit by COVID but were relative safe bets longer term like the banks, and since then I've gone a bit more conservative with my portfolio.
            Now I hold approx 50 in managed funds (20% Balanced, 20% International Shares Indexed, 10% Aust Shares) & the remaining 50% direct in the ASX mainly in banks.
            Overall it has been a positive experience for me and if anything screws up you only have yourself to blame, which I like.

  •  

    I am also concerned about over-inflated asset prices and rising interest rates in future which may pop the bubble, particularly in the US.

    But personally I wouldn't go that far or take any extreme position, because I don't know what's going to happen. Nonetheless I have recently taken a more conservative position from high risk/yield to avg risk/yield

  •  

    buy a panel van, just put it all in that

  •  

    Crazy idea, if you're young let it ride.

  •  

    You may be right, you may be wrong.

    However, if timing the markets was easy I wouldn't be working for a living. In my experience (I work in finance and have previously been a financial adviser) those who try it usually end up worse off than those who don't.

    For example, I was in advice during the GFC crash. At the time it seemed like the whole financial system might collapse. None of us really knew what to do, but we decided for most clients to advise sticking with their agreed long term investment strategy. Some of our clients though were really struggling with stress and not sleeping etc. For those people, we decided to move a chunk of their money to cash, not because we thought it would be the best outcome, but because it would enable them to cope better.

    The markets of course recovered and the initial part of this happened quickly. We gradually moved the clients we cashed up back in over time towards their original asset allocation. Those who made no changes ended up better off after the recovery as they were there for all rather than part of it.

    When you set up a medium to long term investment strategy, this should anticipate that from time to time there will be losses. Your strategy, that is what level of risk you accept, should be based on how you believe you will cope during those periods and whether or not you are likely to panic and sell at a bad time. The herd mentality usually rules with people pouring money in when the markets are high and selling when prices are down.

    Depending on your age, there may be decades before you can touch your super. Jumping in and out of cash is likely to do more harm than good. Also, you will earn next to nothing on cash. Dividends alone will give you better returns, although the capital value may fluctuate. One of the reasons why markets are so strong is very low interest rates and therefore minimal returns on cash. That's probably unlikely to change anytime soon.

    Also be aware that a big chunk of the growth over the last year is recovery from the 2020 crash after covid first hit, not quite as great as it seems.

    • +1 vote

      I had an appointment with an investment advisor which just happened to be the day after the GFC crash hit Australia.

      I was stunned like I imagined most in the US and Australia would be with the shock-horror headlines

      The advisor simply said 'I hope you bought up big yesterday' (when the market plummeted to rock bottom'

      I was speechless - 'how could you ?' - and horrified that this money man obviously had no morals or care for others

      but of course in retrospect he was perfectly correct - 'buy when there's blood in the streets' - as Rothschild reputedly used the news from the Battle of Waterloo by carrier pigeon to beat the market and became instantly enormously rich as a result.

      unless that's not true - http://factmyth.com/factoids/baron-rothschild-made-a-fortune...

      'a big chunk of the growth over the last year is recovery from the 2020 crash after covid first hit, not quite as great as it seems'

      yes - my super dropped 13% in two months from a peak in Feb 2020 to Apr 2020 (I check end of each month)

      and by end Jun 2021 had grown 29% from the trough of Apr 2020, or 11% from the peak of Feb 2020.

      still better than a smack in the face with a wet fish.

      All left in super High Growth option throughout.

      •  

        "The advisor simply said 'I hope you bought up big yesterday' (when the market plummeted to rock bottom'

        I was speechless - 'how could you ?' - and horrified that this money man obviously had no morals or care for others

        but of course in retrospect he was perfectly correct - 'buy when there's blood in the streets' - as Rothschild reputedly used the news from the Battle of Waterloo by carrier pigeon to beat the market and became instantly enormously rich as a result."

        Buying shares on the markets isn't a morals or care for others matter (I mean, you don't even know who it is you're trading with, so how do you know their situation?)- but even if it were - buying in those times would be an example of such 'caring' - they want to get out of the market and want someone to buy off them, which you do. They get cash and peace of mind, etc.

        But it's not like that, just as it isn't callous to buy a rising share off someone else who wants to sell (this depriving them of their future gains, etc).

        Remember, for every seller there's a buyer, and vice versa.

        And the Rothschilds thing is totally made up. If you want a real historic example of how people use market knowledge advantage to make money, here's an example from 1790: http://dewinforex.com/forex-basics/high-frequency-trading-fi...

        • +1 vote

          'an example from 1790'

          thanks - as a history major I always appreciate that perspective

          I'm guessing Sumerian clay tablets recording trades carried by camel were an attempt to beat others to the profits

          and the search for a sea route to the Spice Islands was to beat the land routes

          and yes I did see something about building a mid-atlantic data centre in Iceland or Greenland in an attempt to beat others with millisecond advance knowledge …

          timing the market versus time in the market, etc.

  •  

    Michael Burry said that meme stocks were set to crash - https://www.cnbc.com/2021/07/01/michael-burry-reportedly-say...

    So it'll only affect you if your superannuation invests in Gamestop, Timber futures, AMC, etc

    •  

      I don’t know when meme stocks such as this will crash, but we probably do not have to wait too long, as I believe the retail crowd is fully invested in this theme, and Wall Street has jumped on the coattails,” Burry told Barron’s.

      He made headlines in 2019 after he said he was long GameStop, but sold his stake during the fourth quarter of last year, before the meme mania in January.

      This shows that Michael Burry's "ability" to predict tops and bottoms is just as good DFV (a.k.a Roaring Kitty). He probably shorting GME with his salt collection.

      Contrarians saying something long enough will eventually see it happen. This could be a week, a month, a year, or ten years from now.

      DCA, zoom out and relax.

  •  
  •  

    Michael Burry is wrong more often than he has been right about a crash. He still made a ton of money the one time he was right but it's hard to take him seriously.

  •  

    Move all your super to bitcoin.

  •  

    When in doubts about the financial market, BTC is the hedge

  • +1 vote

    Hi, should i move all my money into something that has near zero growth? Why yes, yes you should.

    End sarcasm.

  •  

    I sense inflation coming, and it's the best way out of huge debt everyone has. You don't want to have cash during inflation.

  • +1 vote

    If you are worried about hyperinflation then cash is the worst thing possible. Invest in tangible assets. Property, gold etc

    •  

      High inflation (not necessarily hyperinflation) is a concern/big risk in the US because of the extent of Government spending. It's not as much of a risk over here.

    •  

      Which is happening at the moment, cheaper states are being flooded with housing investors from Melbourne and Sydney. Those same people who complain about rich Chinese flooding them.

      Its a horrid circle, houses in Adelaide are now selling 10-20% then should, purely as they claim that area will double in value in 5 years.

      •  

        House prices aren't included in the inflation measure in Australia.

  •  

    i have done that in 2007 and forgot about it and it now costs me hundreds of thousands

  • +1 vote

    As an alternative idea…

    Why not let your current super run all the way up to a crash (whenever it happens) and then start doing a co-contribution into super? You get the perks of adding more foryour retirement if you put in an amount each month/fortnight and a decent tax incentive to boot!

    Not sure if anyone else has mentioned this?

  • +2 votes

    Don't do anything you don't understand, and especially because some has-been suggested it.

    “Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves.”

    Peter Lynch

  • +1 vote

    Higher inflation and Delta is coming to party. Setting aside a few bags of dry powder for a dip is advisable.

  • +1 vote

    Buy Dogecoin, it's going to the moon. Use case and Lambo soon. Only way to buy tickets to go to space on Elon's spaceship, in space Dogecoin will be the only currency. Buy buy buy.

  •  

    Have plenty of pillow cases - put the money in there then put it underneath bed.

  •  

    Keep in mind it’s all a fugazi. Consider keeping some where it is and some in cash.

    https://youtu.be/hAQA_29Htts

  • +3 votes

    Had a mate tell me to cash my super when the pandemic struck and I told him not to do it. Now I've gone from 140k in the crash to 215k. Can't say it would be the same for him. Think it's best to leave it.

  •  

    Cash is terrible at the moment will just lose money. Super is a long term play that you only ever lose on if you have to sell in the "crash" Year. Sit on it long term and it will be a steady winner.