SMSF investors cannot afford to rely on conservative investment strategies and should consider “unconventional” methods to fund their retirement, according to Wingate Asset Management.
SMSF investors tend to have less diversified portfolios, typically with high allocations to cash, Wingate’s chief investment officer Chad Padowitz told SMSF Adviser.
“In the pre-retirement stage, what you don’t want is a lot of volatility in returns, but on the other hand, you can’t afford to not earn a return,” Mr Padowitz said.
Pre-retirees should be aware they are currently faced with a different investment environment to the previous three decades, Mr Padowitz added.
“For example, following a 30-year bull market in fixed income coupled with the zero interest rate policies adopted by major central banks, the risk versus return dynamic on bonds is now decidedly negative,” he said.
“Therefore, investment strategies trying to include the three aims of low risk, maintaining living standards, and dealing with longevity, are blending incompatible aims.
“The reality is that in retirement risk must be maintained or even increased. This may sound concerning for many retirees, but the risk of an underfunded pension should be more alarming.”
SUBSCRIBE TO THE SMSF ADVISER BULLETIN
- 21 Aug 2016Risks flagged with real estate appraisal valuesBy Miranda Brownlee
- 21 Aug 2016Lawyer challenges ATO view on two fund strategiesBy Miranda Brownlee
- 18 Aug 2017ATO locks in details, addresses panic on real-time reportingBy Katarina Taurian
- 18 Aug 2017Data feeds unreliable for new reporting, says mid-tierBy Miranda Brownlee
- 18 Aug 2017Tax component confusion spurs potential tax liabilitiesBy Miranda Brownlee
- 18 Aug 2017Contributions triple in June quarter, survey showsBy Staff Reporter
- view all
- ATO locks in details, addresses panic on real-time reporting
The tax office has addressed several points of confusion with the new events-based reporting regime, locked in key deadlines, and outlined w...read more
- Data feeds unreliable for new reporting, says mid-tier
With an estimated 20 per cent of SMSFs still encountering errors from data feeds, one mid-tier firm believes the ATO should allow SMSF pract...read more
- view all