Correspondence: Buying overseas shares, portfolio changes, SMSF returns and more.

Buying overseas shares, portfolio changes, SMSF returns and more.

Buying overseas shares

Could you provide me with some guidance on the best way to purchase shares in the Bank of Ireland?

I have been watching these shares for a while since some comments were made by James Kirby on one of your many video segments, as his portfolio currently holds shares in the company.

PN

Editor’s response: Thanks for your question. You should be able to buy Bank of Ireland shares through any major online broker by opening an international trading account (however, please check the stock is currently available first). Also be aware that the brokerage costs are more expensive than trading domestically.

There are other factors to consider when investing overseas as well, some of which James and Alan Kohler discussed in our latest Inside Line episode.

Alan Kohler’s portfolio

l am interested in whether Alan intends to change/update his portfolio. l came on board as a subscriber last year and was very interested in it, which provided a few tips for me. Does he review/modify it after 12 months?

ML

Editor’s response: Thanks for your query. Alan updates his portfolio on an ongoing basis, and he discussed with James Kirby some recent changes he made in one of our Inside Line episodes.

SMSF’s high return assumptions

In Bruce Brammall’s article SMSFs become a distorting force, it says that SMSFs also seem to have investment return assumptions that are simply too high, according to a report by Credit Suisse. They have benefited from massive returns in shares and property in the last few decades and are expecting those returns to continue.”

What does it mean? I am confused about the following: Were SMSFs significant during the last ‘few decades’ to benefit massively from shares and property? SMSFs have grown to prominence in the past few years, but then haven’t they all suffered from the GFC?

So who exactly has benefited, that too massively, from property and shares and when?

Raji Godbole

Editor’s response: Thanks for your query. Credit Suisse’s main point is that SMSFs assumptions for returns are too high. Even when the fallout from the GFC is included, these are baby boomers that have seen their house and equity portfolio double over the last decade or so. Indeed, the S&P 200 index is up around 75% since 2000 – and that’s before dividends and franking credits are included. Likewise, the returns in property have been huge: if we look at house prices going back to 1996 (see The property bubble myth is busted), the one-year growth rate averages almost 8%.

Retirement age discussions

I believe the current “kite-flying” and general discussion on increasing the retirement age (see Bruce Brammall’s What’s on the budget’s super wish lists) is very one-sided. I know many people including myself who are in their 50s and who have been looking for work for some time. It is patently obvious that employers are not taking on the over 50s and will actively look to get rid of this group of employees. Robert Gottliebsen has mentioned this group of people before. By increasing the retirement age the government is effectively forcing people into other parts of the welfare system for longer. Also, with high levels of youth unemployment, it is ironic that we want older people to stay in work and reduce opportunities for our children.

It would be great to hear Eureka Report advocate for a balanced discussion on that. Unless there are jobs for 50 Australians, then increasing the retirement age is not solving any long-term structural issues in the budget.

LNG employment opportunities closing in

In relation to Adam Carr’s recent article, perhaps from a pure investment viewpoint unemployment may not appear to be a serious matter.

But here in Queensland, where I have been working over the last 2.5 years (the centre of the new “sliced bread” LNG), unemployment does matter. Some of these players are getting closer to producing the new liquid money – Australia’s next great resource – yet many can’t get a job amid the new opportunities.

All of these people, including mechanical and chemical engineers as well as mechanical tradespeople, are starting to do tough, sleepless nights, with uncertainty over the future in what is for many of them the so-called twilight years of their employability. This area would be the greatest construction zone on the east coast, but the opportunities are closing in. By the end of 2014 many more will be facing or enduring unemployment.

Name withheld