How are FHSS returns calculated and what happens to your Super balance?
By - IntuitionaL
Yep - your explanation is correct. And you're right also about super not knowing/caring whether it's for FHSSS - it's just a voluntary contribution, the ATO governs what you can take out.
For me as someone with a fairly high risk tolerance in super (under 30), I don't see a need to reduce risk by setting it as cash. I'd rather leave it like everything else, and accept that on average it will return more but with an element of risk.
The reason young people have a high risk tolerance is because they have a long investment timeframe. People using the FHSS usually are not keeping the money in for a very long time. In that case, investing FHSS funds aggressively would not be a good idea.
The tax benefits pretty much outweigh that risk. Would need a 20% drop or so. INB4lookwhathappenedwithcovid.
I'd love to see a super fund administrator talk about whether in a practical sense, only the new contributions (those in cash in your example) are withdrawn when the ATO lets them know the amount to withdraw, or if the amount could also end up being taken out of your older balance sitting in higher-risk investments.
Something in me suspects super admin systems are not actually that smart and may take a proportion from both. Maybe that's fine with some people who do it, but it wouldn't mitigate the risk in quite the same way as intended.
Personally I am taking the risk of continuing to invest my super as I would otherwise, in about 80% growth assets. I'm going to be doing this for 4 years, so I don't want to miss out on 4 years of gains. Different situation perhaps if FHSSS is a short-term prospect.
This is correct IME. I’m with QSuper and they told
me to keep it in cash, which I did. Then when I requested the release they didn’t have the ability to pick what they sold and ended up selling my high growth funds and left me with a pile of cash.
Same situation here. Kept mine in fixed interest within super and then moved to cash right when the markets started going down with covid, as would be withdrawing soon. When it withdrew it was all taken from my MySuper investments (which I had first) so I then changed the cash allocation back to MySuper. I probably missed out on some returns, but my super balance also only dropped 10 percent during covid instead of 20, as half my super funds were in cash.
How does one set the specific concessional funds in their super for FHSS to cash? Maybe its just my super but I believe all I can do with Rest is just allocate a certain % of my balance to an asset class.
I know with Aus super, when you are changing your asset allocations, you can also change where new contributions are allocated to as well.
It's unlikely you can split out your new contributions and your new employer contributions, but some funds can certainly split out existing balance and new contributions.