Generally, if you want to keep your job, and your customers, it pays to be right.
That applies doubly in the financial services industry — if your clients aren't making money, they're not likely to stick around.
And triply when you're a stock picker, and every single recommendation you've ever made is on full display to your members.
(Your financial advisor, stock broker or preferred stock picker does the same, don't they? I mean, they'd want to be transparent, right? Otherwise, why stick around? But I digress…)
Sometimes, though, being right isn't ideal.
Like when, two months ago, I wrote "They're coming for your Super".
Just last week, the federal government announced a review into the retirement savings system in Australia.
Now, I'm all up for any objective inquiry that wants to help government (and society) run better, in any field.
But how often is that the case?
I mean, the inquiry had barely been announced, before the Treasurer decided that the family home was out of bounds.
Then, 48 hours or so later, The Australian reports that panel member Dr. Deborah Ralston has ruled out looking into franking credits.
I don't know about you, but the walls seem to be closing in on this inquiry already.
And the aforementioned Dr Ralston? The Fin reported yesterday that apparently she's previously called for Super to be voluntary for low income earners.
As I wrote two short months ago:
"If I broke up the workforce into high-, middle- and low-income workers, and asked you which group was least likely to earn enough to save (extra) for their own retirement, which group would you choose?
"And that group, by definition, would need the most help in providing for their retirement needs, right?
"By, say, a compulsory scheme…"
Sure, if low income earners aren't being paid enough, pay them more.
But by short-changing them on Super? I can't think of anything worse (and, frankly, more irresponsible for future taxpayers who'll need to foot the larger pension bill.
Of course, the other concern is that this inquiry is a stalking horse, to give the government cover to halt the proposed increase in Super from the current 9.5% to 12% of salaries and wages.
Again, I can't think of a worse idea (and there's some decent competition!).
If you took a straw poll of financial advisors and experts, how many do you reckon would say 'Yeah, don't save more than 9.5% of your pay. It's a waste!'
I can count the number on the fingers of no hands.
And how many experts have written reports saying 'The current level of Super contributions is enough to make sure Australians will have enough money in retirement'?
Yep, the very same number.
None.
As I said on Twitter yesterday morning. I smell a stitch-up.
Now, you can conjure any number of real or imagined conspiracy theories as to why. Frankly, I'm not overly interested in why it's happening.
It's not the main game.
What's important is that we remain vigilant.
For the record, I have no dog in this fight, other than perhaps losing out a little more in Super contributions from the boss.
That aside, I want to make sure all Australians have enough money in retirement. That's not going to happen, if the increase in Super to 12% of pay is either cancelled or delayed.
And low-income earners are going to be the hardest hit, if their Super is made voluntary.
Just as, frankly, those of us not on low incomes would be.
Governments and behavioural psychologists know we're terrible at delayed gratification. We all want it now.
That's precisely why Super has to have a preservation age in the first place — to save us from ourselves.
Don't believe me? They why aren't you cutting back your spending, today, to save more for tomorrow?
Because we've convinced ourselves we can't — or don't want to. And yes, I'm including myself in that.
That's why we have Super.
I don't know the people who are calling for changes to the Super system. Maybe they're motivated by goodwill. Or politics. Or ideology. Or something else.
What I do know is that Super is one of the best things about our financial system.
It's not perfect, of course — and if the government wants to look into anything, perhaps they can start with exorbitant fees and the under-investment in overseas equities.
But capping the contributions? Making Super voluntary? No thanks.
The panel's job is to improve the Super system. We'll be vocal in making sure that's just what they do.
(And if the government needs a reminder, just look at the electoral cost of Labor's policy on franking credits. Hopefully the Treasurer is a keen student of history.)
Of course, the old-fashioned way still works, too.
If you're fortunate enough to have a job that allows you to earn more than you need to live, you can — and I hope you are — putting money aside for the future.
Whether or not the government increases the Super contribution, you can make up the difference — and more — by being disciplined and keeping the purse strings tight.
The other thing you can do, of course, is to let compounding work for you, by adding money regularly and investing it well.
I think shares — Australian and overseas — are a smart way to do that for most, if not all, people.
Yes, they can be volatile, but the long-term returns from shares are almost unparalleled, and I expect that will probably continue over the long-term future, as well.
You can buy an index-based exchange-traded fund (ETF), and get the market return (less a tiny fee) if you invest in something like a Vanguard total market fund.
Or, you can try to do better, by investing in individual companies, which is how we roll at Motley Fool Share Advisor, the investment service I run.
Almost 8 years in, we're showing the market a clean pair of heels.
Past performance is no guarantee, as the legal eagles (rightly) require us to say, but we're following in the footsteps of some successful investors, and doing pretty well so far.
Investing in shares isn't necessarily for everyone, but can be done by almost anyone, particularly with some help from a trusted (and transparent) advisor.
Regardless of how you invest, and in what, it's important that we keep the pressure on the government not to water down what I think is the best retirement system in the world.
I hope the panel is objective and thoughtful. I hope they have their priorities right.
Among the outcomes from the inquiry, these two must be non-negotiable:
1. Super must remain compulsory.
2. Super must go to 12% of pay, as soon as practicable.
The future of both retirees and the federal budget demand it.
Fool on!
