SMSFs stand out as asset to beat inflation

Self-managed superannuation funds (SMSF) have outperformed statutory super funds over the last six months as a result of holding more direct property.

According to research by Otivo, an automated financial advice service, SMSFs experienced a 2.4% drop in value in the last six months, while statutory super funds experienced a 7.3% decline.

The report explored over 52,000 households across Australia looking at all asset classes - the value of owner-occupied properties, deposits, crypto, market investments (including stocks and bonds), statutory super, SMSFs and investment properties, comparing values from 1 January to 15 June, 2022.

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It found the average Australians’ financial assets had dropped by about $69,030 per household (3.6%).

Speaking to Super Review, Paul Feeney, Otivo chief executive, said the main reason that SMSFs had done well was because a lot held direct property which had been hit less hard by inflation.

“But imagine if the market stayed flat, it’s going to result in quite a lot of number of extra years that people may have to keep on working if the markets don't rebound,” he said.

It showed Australians over the age of 40 had been hit the hardest by asset depreciation. And if the situation did not improve that would mean they would need to work an additional 10.74 years while the average Australian under 40 years would need to work an additional 6.6 years.

In a bid to boost their retirement savings, the research found the average Australian could save around $700 a month after their expenses which could be used to reduce their mortgage, top up their super or invest.

“So this is where accessing that personal advice can really help people make those better decisions and regardless of what the markets doing, you find those three things, you're going to end up being better off by the time you retire,” Feeney said.

“I think it's great the Quality of Advice Review is out there looking at well how can we make advice more accessible, more affordable for more Australians.”

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