Correspondence: Ethical investing, the collectables crush, the ATO's backflip.

Ethical investing options, the collectables crush, ATO backflip, and why SMSFs outperform.

Ethical investing options

I refer to the Eureka Correspondence (June 18, 2014) where ‘JH’ encourages you to ‘take a little more seriously the concept of ethical investment’. I certainly agree and, I think, many other subscribers would too. Our share portfolio avoids, for example, investment in mining companies. Would Eureka put together an example portfolio - or two or three - focusing on ethical investment, perhaps with different parameters? I would have thought iShares, or similar, would offer an ‘ethical’ product but I can’t find one - can you recommend something, such as an exchange-traded fund?

ML

Editor’s response: Thanks for your query. Eureka Report published an article on ethical investing last year, highlighting what options are available and the limitations in the area.

Collectables drop in value

The writer did insufficient research into the huge coin/banknote market in The great collectables dump. The major factor for the drop in value is due to John Pettit Pty Ltd from Sydney and The Rare Coin Company from Albany going bankrupt last year, which also flooded many items onto the market.

C. Norbert Riemer

David Gilmour’s response: Thanks for your input. While I didn’t mention the impact of these bankruptcies on the market, the reasons why their sales fell and they went bankrupt in the first place were attributed to the global financial crisis and the government review of self-managed superannuation fund rules, which were highlighted in the article.

Insurance for coins held in SMSFs

Back in 2003 we purchased some gold coins and some collector coins: a 1930 penny and an 1813 dump. We have them stored in a safety deposit box. We have never had Insurance as the insurance value would be $450 plus the cost of the box, which is another $396.

We do not have insurance on our trading shares yet they are less safe on the stock market than gold in a safety deposit box.

With the article The great collectables dump it claims you must have insurance and safety deposit box, an extra cost of $396 per annum. I have been told that some super funds are exempt? How can you find out what makes you entitled to be exempt?

Name withheld

Editor’s response: Thanks for your question. The ATO does not state any exceptions to its ruling on collectables, however you will need to contact your financial adviser or accountant to determine if you have a case if the costs are prohibitive and appear to not be in the best interests of the members.

Why ATO backflipped on 0% loans

In regards to Bruce Brammall’s article, I think, from my non-legalistic background, the main issue the ATO had with their recent private ruling was the loan terms, not the rate. The loan had no repayment schedule and was open ended. A loan that doesn’t need repaying looks like a contribution not a loan to me. Easy solution - pay back the loan over a specified term.

Name withheld

Managing your own finances

Robert Gottliebsen’s article about SMSFs outperforming managed funds came as no surprise to me after a conversation I had one evening at the pub with a mate, who had just finished a financial planners’ course.

We were chatting away about what he had learned, when I said “I don’t know if I would like the responsibility of managing someone’s life savings”. His reply came quick “Mark, I promise you I will be absolutely fearless with other people’s money!” Although we had a good laugh and it was said in fun, for me it really sums up the difference between managed and self-managed funds.

Mark Umbers

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