Paul Stephenson
Age: 61
How big is your SMSF and how many members are in the fund?
The fund is now $1.6 million. I only have one other member of the fund – my beautiful wife Jenny.
Why did you start a SMSF?
I have been managing the fund since 2006. I was a senior executive manager for a global corporation, which was sold to an international private equity firm. We had the opportunity to invest in the new company. I decided to invest in the deal through a self-managed superannuation fund rather than under my own name. So it pretty much started from that small transaction.
Is it more or less difficult to manage than you thought it would be?
It was easy in the early days but it has become complex as the fund has grown. You can easily fall through the cracks. That’s why we decided to get an administrator. They make it easy but it isn’t cheap! It’s a fixed fee so obviously the larger the fund the better the fee % (laughs). I still have control over my investments but compliance and administration is all done for me. They sometimes tap me on the shoulder if an investment idea pops up. It’s now the best of both worlds.
Do you enjoy managing it?
When I started my SMSF, I really became committed to educating myself. It was the best investment I made. I read a lot of books, finance magazines. I also enjoy watching Peter Switzer on his show on Foxtel. He is a terrific bloke and very very knowledgeable. It helped me to understand strategies like salary sacrifice, super contributions and tax free pensions which all add to overall performance of the fund.
Are you pleased with its performance?
We are very happy with the fund’s performance. Some periods have been a bit scary but overall the fund has performed well. The fund has achieved a 35% performance over five years (before costs and pension payments) and 10% over the 1-year period (after costs and pension payments- a very good year). We are moderate conservative investors. Our mantra is don’t be too aggressive ” to sleep well at night”.
What is your asset allocation?
The asset allocation is as follows:
Cash: 13%
Income investments (term deposits, bank debt securities, corporate bonds): 31%
Gold: 2%
International property: 14%
Commercial property: 8 %
Australian shares: 12%
International shares: 8%
International listed unit trusts: 12%
What are your favourite investments/stocks and why?
My favourite investment is the US Masters Residential Property Fund. The investment has done really well for us. We bought it when it was A$1.03 to US$ and the price has since grown by 70% with strengthening real estate market. It pays a dividend of around 5% a year. Around 34% of the total fund is exposed overseas so we are also getting a lot of benefits from the falling Australian dollar.
What investments do you have outside of superannuation?
We have our house (with two extensions), which we have fully paid off. We still have two adult children at home but they have plans to do their own thing. I have always preferred investing into my own superannuation because of the tax benefits. This may partly change on full retirement and any legislative changes.
I am currently working three days week (plus two days on the golf course!), and with my wife earning a small income, we are at the stage where it makes sense to focus on our super.
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