Australian Unity has labelled the SMSF gravitation towards cash a “significant issue”, despite recent research which suggests SMSF allocations to cash are decreasing.
Cash is often seen as a “safe haven” for investors, Damen Purcell, head of retail distribution at Australian Unity Investments told SMSF Adviser.
“When [investors] think about their superannuation savings, that’s something they’ve worked for most of their working life, and they’re looking for something that ensures that they don’t lose it,” Mr Purcell said.
However, the standard rate of superannuation saving without growth added into it is not going to be adequate for most investors, especially given increasing life expectancies, Mr Purcell said.
“[Investors] are only just keeping pace with inflation, which is fine if you’ve got millions, but the truth is that most people need to grow their super and their retirement savings.
“I agree that cash is the sturdy option, no doubt about that, but the question I have is that people with super savings in the mid-tier amount… is that going to be enough to sustain them for [what] could be a reasonably long life?”
Mr Purcell added SMSF investors are missing out on various growth assets by sticking to cash, and continue to lose out on markets experiencing “reasonable” growth, including those offshore.
“If you look at market cycles… equity markets have returned stronger than cash, over the 20-year cycle… that’s where having a diversified portfolio comes as a distinct advantage,” Mr Purcell said.
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