Investment Strategies

Trustee spotlight: Near-bust experience prompts DIY approach

By AMP Capital

“I work in a high-pressured sales executive role now. I won’t retire fully, but I really love coffee and long-term I could be a barista and drop down to a much smaller salary because I will have that financial security behind me in my SMSF. Or I could travel and work part-time."

A negative experience during the ‘tech wreck’ of the early 2000s led Mark Bramich towards managing his own money.

“It took me 10 years to get back to where I was before the crash; I got really burnt. I decided once I had made back the money I lost, I would switch out of equities and into fixed interest investments and bonds.”

“But that means you’re only getting a return of about 2% to 3% a year and I really want a return of between 8% and 9%, which actually equates to an even higher return taking into account compound interest,” he explains. 

So Mark, 44, decided he wanted to find investments that achieve a positive return every year until he retires at a higher rate than returns from fixed interest investments. Longer-term, he wants to retire at 55 with $1 million in assets.

“I live in Tasmania, where the cost of living and property is much less than in Sydney or Melbourne. If my self-managed super fund has a $1 million balance when I retire I will be able to live a comfortable life.”

“I work in a high-pressured sales executive role now. I won’t retire fully, but I really love coffee and long-term I could be a barista and drop down to a much smaller salary because I will have that financial security behind me in my SMSF. Or I could travel and work part-time. The idea is to be in a position to be able to retire. But realistically, I probably won't, I'll do something else,” he says.

Hitting the goal 

One of the ways Mark intends to achieve his million-dollar target is by investing through his SMSF in AMP Capital’s Wholesale Australian Property Fund.

Mark’s first investment through his SMSF, which he opened three years ago, was in this fund. “I’ve invested with other managers since then, but I'm happy to say it's been a good journey so far with AMP.”

Established in 1985, the fund has returned 9.1% to investors, net fees, since inception. The low-geared fund comprises office, retail and industrial properties and has a portfolio occupancy rate of 96%. 

While Mark has decided to sit on the sidelines in the equities market for now, he doesn’t rule out further share investments down the track when there’s a buying opportunity.

“I don't want anything to do with equities at the moment, because at some stage, something's got to burst. But I'm not saying I will be out of the market long-term. I'm waiting for a correction to buy.”

“My philosophy at the moment is to buy largely unlisted, high-quality assets with a high-quality manager.” 

Advice for trustees

One of Mark’s best pieces of advice for SMSF trustees is to draw on free information sources to guide investment thinking.

“The internet is a highly powerful tool. I subscribe to free newsletters, which alert me when something is going on in the market. I also read AMP Capital’s SMSF News. There was a great article recently on the pros and cons of investing in residential versus commercial property.” 

Mark has been focused on generating wealth since his teens, which has taught him valuable lessons. 

“I'm fairly savvy and I always have been finding ways to make money. I've made a lot on the share market, but I've also lost a lot. My experience tells me successful investing is the search for the highest yield that you can get for the lowest risk.”

“You can only do that by thoroughly researching the product and the manager. Don't focus just on three- and five-year returns, look at seven- and 10-year returns.” 

He also uses a Morningstar tool that compares the attributes of more than 9,000 funds to analyse the divergence between the five-year and 10-year returns of funds in which he’s interested in investing.

“A lot of equity funds are sitting on a five-year return of 20%, but the crash happened within the last 10 years. So their 10-year return might only be 11% or even less. Looking at the difference between the two gives an indication of how the fund performs through different market cycles.”

“Nobody knows when the next correction is going to be, but a lot of people are sitting on the sidelines waiting for it. I try to find investments that can weather the storms. Whatever asset class you're in there will be headwinds at some stage and you want to find fund managers that have the smarts to guide you through them.”

  • Investment Strategies
  • SMSF News
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Important notes

While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455)  (AMP Capital) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided and must not be provided to any other person or entity without the express written consent of AMP Capital.

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