Managing your retirement savings through a Self-Managed Super Fund (SMSF) offers unparalleled control and freedom, but it also brings critical decisions. What assets should you invest in? Shares? ETFs? Crypto? Bonds? Or property?
While each asset class has its merits, the truth is, not all are created equal—especially when it comes to creating stable, long-term wealth. In this email, we’ll break down the key investment options available within an SMSF, highlight the advantages of property, and explain why we believe it’s the superior choice for building and preserving wealth over time.
Your SMSF Investment Options
1. Shares
Shares offer partial ownership in companies, with returns tied to their profits and market performance. While they’re liquid and can generate high returns during bull markets, they’re also incredibly volatile. External factors like market crashes, company mismanagement, or geopolitical events can send your portfolio value plummeting overnight.
2. ETFs (Exchange-Traded Funds)
ETFs allow you to spread risk by investing in a collection of shares, bonds, or other assets in one package. They’re great for diversification, but their growth is tied to the same volatile market forces that affect individual shares.
3. Cryptocurrency and NFTs
Cryptocurrencies and NFTs are alluring for their potential to deliver astronomical returns. However, their value often hinges on speculation and hype rather than intrinsic worth. Crypto is notoriously volatile—one tweet or regulatory decision can send prices soaring or crashing. These assets lack the stability and predictability needed for retirement planning.
4. Fixed-Income Investments (e.g., Bonds)
Bonds are often viewed as safe investments because they offer steady, predictable returns. However, their growth is modest at best and rarely outpaces inflation, eroding your purchasing power over time.
5. Direct Property Investment
Property is a tangible, real-world asset with a track record of steady growth, income potential, and inflation protection. Unlike shares or crypto, it’s something you can see, touch, and utilize. This makes it not only a smart financial investment but also a psychologically reassuring one.
If you’re considering using your SMSF to invest in real estate, it’s critical to know what makes a good investment property for your SMSF—from rental yield to location, demand, and long-term value.
Why Property Is the Superior Investment
1. Tangibility and Security
When you invest in property, you’re investing in something real—land and buildings that have inherent value. Even during economic downturns, property retains a base level of utility. Compare this to shares or crypto, which could lose all value in extreme circumstances. Property offers a level of stability that no paper or digital asset can match.
2. A Hedge Against Inflation
One of the greatest risks to your retirement savings is inflation. Over time, inflation erodes the purchasing power of your money. Property, however, has a natural defense against this. As the cost of living rises, so do property values and rental incomes. This ensures your investment not only holds its value but grows with the economy.
3. Leverage for Exponential Growth
Property allows you to use leverage—borrowing money to invest in an asset worth far more than your initial outlay. For example, with $200,000 in your SMSF, you could purchase a $500,000 property using an SMSF loan. If the property appreciates by just 5%, your return is calculated on the total property value, not just your deposit, amplifying your gains.
4. Dual Income Streams
Property delivers both capital growth and rental income. Over time, rents typically increase, providing a steady income stream that can fund your retirement. Shares may offer dividends, but these are often inconsistent and tied to company profits.
5. Lower Risk Compared to Other Assets
While no investment is without risk, property is widely considered one of the lowest-risk assets available. Why? Because people will always need places to live and work. Even during economic downturns, well-chosen properties tend to retain their value better than shares or speculative assets like crypto.
Addressing Common Pushback: “My Advisor Recommends Shares…”
It’s not uncommon to hear financial advisors recommend shares, ETFs, or other financial products as the “ideal” investment for your SMSF. But it’s important to remember that this advice is opinion-based, not an absolute truth. Here are some critical considerations:
1. Is Their Advice Rooted in Life Experience or Just Education?
Many financial advisors are highly educated, holding degrees and certifications, but their knowledge often comes from textbooks and classroom theory. While this foundation is helpful, it doesn’t replace the real-world insights gained from personal experience. Investing is not just about numbers—it’s about timing, navigating emotional markets, and recognizing opportunities that others might overlook.
Advisors often lack direct, hands-on experience with the very assets they recommend. They may know the theory behind shares, but have they personally built significant wealth through investing? Ask yourself if their guidance is based on what they’ve learned by doing, or simply from what they were taught.
2. The Hidden Incentives Behind Recommendations
It’s no secret that some financial advisors receive kickbacks or commissions from recommending specific products. This can create a conflict of interest, where their advice is driven by their own financial gain rather than what’s best for you. For instance, many advisors earn ongoing fees when clients invest in shares or managed funds because these products require active monitoring.
With property, the costs are typically limited to the initial purchase, a small annual tax-related expense, and any property management fees (if applicable). There’s no need for continuous monitoring by an advisor. That means no recurring fees for them—and no long-term profits to be made from your SMSF portfolio.
3. Why Shares Are a Recurring Revenue Model for Advisors
Shares and managed funds offer advisors a way to charge ongoing management fees for monitoring your investments. They can charge you year after year, regardless of whether the market goes up or down. This isn’t the case with property, which is more of a set-and-forget asset once purchased.
With property:
- There’s a one-time purchase decision.
- Your SMSF pays minimal ongoing costs (e.g., tax returns and property management).
- You don’t rely on someone constantly managing it, saving you from the endless advisory fees.
For advisors, shares are a business model. For you, they can become an expensive dependency.
4. The Power of Taking Control of Your SMSF
By investing in property, you’re taking direct control of your retirement funds. Instead of relying on an advisor to manage your portfolio or make decisions for you, you have a tangible, real-world asset that grows over time.
While shares and ETFs may seem appealing, they leave you more dependent on financial markets and advisors. Property, on the other hand, allows you to build a portfolio that generates rental income, appreciates in value, and doesn’t require constant management or monitoring fees.
The Hidden Power of Property: A Legacy That Grows
Property is not just an investment; it’s a legacy. Unlike shares or crypto, it’s an asset you can pass down to future generations. Its value is rooted in land—a finite resource that increases in demand as populations grow.
Whether it’s leveraging equity for new opportunities, enjoying rental income, or watching your property’s value grow over time, real estate has the potential to create multi-generational wealth.
Finding the Right Advisor: Ask the Hard Questions
When dealing with any professional—whether they’re a financial advisor, accountant, or consultant—it’s essential to dig deeper into their personal achievements. You’re trusting them to guide you in making life-changing decisions, so the first step is to ask, “What have you achieved yourself?”
If their response is vague, dismissive, or deflective with phrases like, “That’s personal,” it’s a major red flag. Why? Because someone who genuinely knows how to build wealth or succeed in their field should have no problem sharing their real-life accomplishments (even without getting into specifics). If they can’t back up their advice with tangible results, then their guidance might be rooted more in theory than experience—and that’s not what you want.
Now, if the person lights up and shares achievements that sound extraordinary, sit down, listen, and learn. This is the hallmark of someone who has walked the walk, not just talked the talk. Their successes—and the strategies they used to achieve them—are what will provide you with the most value.
It’s also important to remember that good advisors aren’t cheap. Those who’ve built wealth or achieved remarkable success know the value of their expertise and will charge accordingly. But investing in the right mentor or advisor can save you countless mistakes, time, and money in the long run.
Ultimately, asking the hard questions and gauging their real-world experience is the best way to ensure you’re getting advice from someone truly qualified. If they’ve been where you want to go, they’ll help you navigate the path more effectively. If they can’t or won’t share their own success stories, it’s time to run for the hills.
Take Control of Your Retirement Strategy
At the end of the day, every investment carries some risk. The question is, how much risk are you willing to take with your retirement savings? With property, you have a stable, tangible, inflation-resistant asset that offers both immediate and long-term rewards.
If you’re ready to explore how property can transform your SMSF and create a legacy of wealth, we’re here to help. With the right guidance, investing in property is more than just a financial move—it’s a step toward a secure and prosperous future.
