Running your own self managed super fund

There was an interesting article from the Weekend Australian Financial Review (December 4-5, 2010) called "Sometimes it's better to trust the experts" that I wanted to share with you.

A summary of the mains points are as follows:

There are more than 400,000 Australian investors running their own self managed super fund (SMSF).

Based on the averages from a Mercer survey, 180,000 of these SMSF investors will underperform the market.

Those managing their own SMSF face strong headwinds:

• Sharemarkets are struggling to overcome lower global economic growth.

• Interest rates overseas are low so current yields are low.

• Australian residential real estate has plenty of question marks. For example, the diagram below shows Australian house prices are 35% above their long term trend. (Source Weekend Australian Financial Review and AMP Capital)

• Many SMSF's have no issue about buying property using borrowed money. However, how many SMSF's have done stress tests on the geared property investments for rising interest rates or falling property values or even both - and for longer than expected?

SMSF's can now trade shares minute by minute and speculate on commodities from their computer.

Risky investments can produce losses as well gains.

My thoughts - SMSF investors should consider seeking financial advice to implement an appropriate long term investment strategy that has clear objectives and is regularly compared to a benchmark.

Important Information

The above information provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The above information doesn’t take into account your personal objectives, financial situation or needs. It’s important for you to consider these matters before making any financial decision and I recommend you seek help from a financial adviser.