Self Managed Super Funds – Another way to Retire

Posted on November 26th, 2012 · Posted in News

After years of below-par share market returns, it’s hardly surprising more people want to manage their own superannuation.  Self-Managed Super Funds (SMSF) offer lower fees while allowing investors to choose the types of assets with which they’re comfortable.

So where do the 440,000 SMSF investors invest? And are their strategies paying off?

While every fund is different, the combined figures reveal clear differences between members of a regulated fund and those who choose to go it alone.  For one, people who manage their own super are far more keen on the Australian share market, where they typically park 40% of their retirement savings. International shares play an insignificant role.  Regulated funds, in contrast, tend to put between 25% and 35% of their assets into local shares, plus another 20% into international shares.  Self-managed funds also favour cash, which accounts for almost 30% of assets, far ahead of the 10-15% allocation preferred by regulated funds.

How has this strategy worked out for the $440 billion invested in the SMSF sector?

On the whole, analysts say returns have been reasonable, if not spectacular. Cash has performed well, and this has tended to offset the share market slump, leaving self-managed funds in similar shape to the rest.

The head of research at Rainmaker, Alex Dunnin, says self-managed funds have returned an average of 6% in the past three years, a touch more than retail funds and slightly behind the non-profit sector.  Some self-managed funds have hit the jackpot by picking hot stocks or sectors. But Dunnin says there’s no evidence this is more likely to occur in the self-managed sector.

Where self-managed funds have a clear advantage is their cost. On average, it’s 0.8% of funds under management, compared with 1.26% for other funds.  However, that also needs to be put in perspective. ”You don’t retire on low costs; you retire on money which you get from good returns,” Dunnin says.  As billions more are poured into self-managed funds and advisers eye this booming market, it’s a message worth bearing in mind.

The Infinity Partners Finance team are highly experienced in Self Managed Super Fund lending.

So if you’re looking to set up your own fund or to use your current fund to invest in property, we can help…Give us a call and we can help you Strengthen Your Financial Future through your super fund.