According to the latest industry research from Rainmaker Advantage, as reported recently in Financial Standard, 75% of new SMSF members are aged below 55. The data presents a strategic shift in the sector. Whilst two thirds of existing SMSF members are aged 55 and over, most SMSFs being established now are by younger people in their 40s, 30s and even in their 20s.
The research also indicates that although the average balance of SMSFs has shown almost no material growth over the past five years at $545,000, this average masks the weight of the sector shifting upwards. Whilst in 2004 only 12% of SMSFs held more than $1 million in assets, by 2014 this proportion had almost tripled to 32%. Meanwhile, SMSF balances with less than $50,000 are rapidly disappearing, from 15% in 2004 to 5%.
In terms of asset allocation, large multi-million dollar SMSFs on average hold about 20% of their investments in cash compared to micro-SMSFs which hold around 7%. Residential property makes up only 4% of SMSF assets and collectibles a tiny 0.07%. These statistics dispel an erroneous view that SMSFs are full of jewellery and artworks, or that they are driving first home buyers out of the housing market. In fact SMSFs are three-times more likely to favour commercial over residential property.
While SMSFs have become popular in recent years, increasing their number by 26,000 annually in net terms, in percentage terms this means their growth rate has fallen from 15% in 1998 to now be only 3%. As at March 2016 about 575,000 SMSFs operated in Australia with assets of more than $600 billion, accounting for about one-third of the entire superannuation system.
Source – Financial Standard
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