Ionce knew a very rich guy in his 60s who prided himself on calling a spade a spade. “You’re fat!” he once said to a bloke we’d just been introduced to. “Hey!” I said, coming to the poor guy’s defence (while simultaneously sucking in my gut).
“What? It’s the truth. Look at him. He’s a prime candidate for a heart attack,” he said, before condescendingly directing this to the stranger: “You need to look after yourself. I’m telling you this for your own good.”
True story. Ironically, he was himself built a bit like Shane Warne, circa 1993.
Anyway, my wife says that sometimes I behave like him when she wheels me out in social settings — the only difference is that I’m brutal about people’s financial flab.
Case in point. A while back at a barbecue a guy I didn’t know struck up a conversation with me, saying he had his super with what I knew to be a high-fee fund. He wasn’t asking for advice, just making polite conversation on a Sunday afternoon.
“What on Earth made you go with them?” I asked, head cocked, eyebrow raised. But before he could burble out an answer I said: “I mean it’s just a stinker of a fund.”
Last week, investment group Stockspot came out with its annual Fat Cat Awards, which ranks the worst-performing super funds. What do all these crazy cats have in common?
They all charge high fees, presumably to pay for all their expert fund managers.
Now, if you’re a Barefooter you’ll know I’m a skinny cat who likes index funds (i.e. low-cost funds that mechanically track the stock market, rather than being actively managed).
Guess what Stockspot found?
“Over the past five years we found only 4 per cent of balanced funds beat an index fund. And across all investment categories only 13 per cent of funds beat the indexed option”, adding that this is a global phenomenon in which “actively managed funds have been unable to match low-cost indexed options”.
They say there are only two things to consider when choosing a super fund. First, find the right type of fund based on your capacity to take risk. (Which Barefoot decodes as anyone under 40 should go for growth, anyone over 40 should find a bit more balance.) Second, choose the fund with the lowest fees. (Which is exactly the recipe I follow in my book.)
So, if you’ve read this far and are thinking to yourself “maybe I’m getting licked”, by all means get in touch with your fund and call a spade a spade.
Tread Your Own Path! The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice