Home' SMSF Professionals Association of Australia : SPAA Yearbook 2013 Contents 56.SPAA.2013
GEN Y AND SMSFs
"I have more enquiries from ...
the younger to middle-aged group
about borrowing inside an SMSF
than I do from the upper age group.
Doesn't mean they do it, but that's
where an enquiry would come from,"
Mr Wedd says.
"That's not driving ... the self-
managed path. The ones that end up
on the self-managed path [are there]
either because it suits them better,
or for other reasons. For example,
family, control, investment, cash ow
planning -- that by far outweighs the
borrowing aspect," he adds.
A fresh approach
Historically, SMSF investors have
been criticised for playing it too
safe with their investments, and, in
particular, gravitating towards cash
and Australian shares; however,
some younger investors, perhaps by
virtue of their age, are open to more
aggressive growth strategies.
Justin Wyse, who established his
SMSF at 30, says there's "plenty of
time" for younger demographics
to grow their balance in the
"We can always earn back our
money, sometimes three times as
much for the mistakes we've made,"
Mr Wyse says.
There is "no point" putting
signi cant portions of retirement
savings in cash when you're in the
accumulation phase, adds Mr Jones.
"At this age with ... 25 years
before retirement, my asset
allocation is 100 per cent equities,
because the historical track record
shows equities outperform all their
asset classes," he says.
"I have time on my side. I have time
to ride out the inevitable market falls
that are going to happen, and putting
money into cash just to keep it safe
with zero return -- there's no point to it."
Despite this inherent con dence,
younger investors are paralleling
SPAA and Macquarie's research, which
indicated that one in four SMSF
investors continue to "love experts".
Mr Wedd says that, in the initial
stages of his SMSF, he was "happy" to
seek the help of professionals because
he lacked the time to devote to the
"Certainly from a day-to-day
operational [point of view], I've never
had any desire to personally have to
track... the spreadsheets and do all of
that," Mr Wedd added.
Similarly, Mr Jones says that he
seeks legal and compliance-related
professional advice for his SMSF,
allowing him to focus on his strengths
in investment and asset allocation.
Advice can be particularly
important when you're young, Mr
Kovac says, admitting there is "no
point" in entering into an SMSF if
you cannot outperform your current
"A person needs to either be
knowledgeable enough, or they
need to be willing to pay for enough
advice," he says.
The road ahead
Ultimately, younger SMSF investors
appreciate that planning for
retirement early in the accumulation
phase is crucial to achieving long-
term nancial goals. Despite initial
cost barriers, Ms Heighway says her
nances would not be in the position
they are currently if she had not
established her SMSF in her 20s.
"With contribution caps, you can't
a ord to wait until you're older. You
need to start when you're young,
or you just won't have enough," Ms
"Our parents had the luxury of
putting lump sums in towards the end
... we can't do that, because we're
limited [with] how much we can get in.
You're much better o starting earlier."
Parts of the SMSF establishment
and management process are
becoming more and more e cient,
Ms Heighway adds, with barriers to
accessibility steadily falling.
"[Young people] want real-time
online information about their
investments, and I think that online
option wasn't available 10 years ago," Ms
Heighway says. "But now it's so readily
available that it's almost removed the
barrier to entry altogether."
Investors under the age of 40
can become distracted by other
immediate-term commitments, such
as home loans and family obligations;
however, being driven to distraction
may become a regret, Mr Jones warns
"When I was in my 20s, the last
thing I thought about was putting
money into my super for retirement. It
was just so far o ," he says.
"Now I'm approaching 40, I wish I
had done more."
Katarina Taurian is the features editor
at SMSF Adviser.
I HAVE TIME ON MY
SIDE. I HAVE TIME
TO RIDE OUT THE
FALLS THAT ARE
GOING TO HAPPEN,
MONEY INTO CASH
JUST TO KEEP IT SAFE
WITH ZERO RETURN
THERE'S NO POINT
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