Investors told to stick with reputable SMSF providers as new entrants enter the market.
A spate of new entrants in the self managed superannuation fund (SMSF) market has prompted an investment specialist to remind investors to select reputable providers when it comes to their super.
According to Macquarie Investment Lending division director Peter van der Westhuyzen, since the change in super legislation last year a number of new product manufacturers are looking to cash in on the industry's $320 billion in funds.
"With super, the stats are amazing. Of the $320 billion there are $78 billion in SMSF super funds right now sitting in cash looking for homes," van der Westhuyzen said.
"So what we think is going to happen is that since the legislation changed last year we've picked up through the industry that there are a lot of product manufacturers who are thinking of building products to provide solutions in this area."
As superannuation is such a highly regulated environment it is critical for investors to deal with reputable organisations, he said.
"We've seen it in the investing area, smaller players are struggling when times get tough and investors are feeling the impact financially, they're losing money," van der Westhuyzen said.
"That's the last thing you want to see with superannuation funds."
In terms of investors utilising gearing with their SMSF, van der Westhuyzen stressed a simpler approach was best.
"My advice is be boring: be simple and stick to the tried and tested things that have worked in the past," he said.
"Honestly, you shouldn't be gearing 80 or 90 per cent of the SMSF. In fact some financial planning dealer groups in Australia mandate their advisers to a maximum gearing in their margin loan."
In Part 2 of our exclusive series, we ask leading names to nominate their best investments, the most effective industry group and the importance of platforms.
A former colleague of mine once offered the opinion that industry superannuation funds are reconstructed socialists - despite their union influence, these funds have grown and benefited from a global capitalist world.... read more »
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