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SMSF MEMBERS ARE YOUNGER AND INVESTING OVERSEAS

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What is a ‘New Boomer?” it can be safely substituted for the description of the young or X generation aged under 35.

SMSFs reached a major milestone with one million members recently representing approximately $530 billion of investments.

The dynamic of SMSF members has changed significantly compared to just last year, according to an analysis of Australian Taxation Office (ATO) data by CoreData with over 6 in 10 members aged between 34 and 54.

No longer will SMSFs be seen as a consideration for those approaching preservation age. “New Boomers” are looking to take control of their retirement earlier particularly with the increase in the compulsory superannuation contribution to 9.25% of their salary that cannot be accessed. New boomers are uncomfortable with the feeling that their hard earnt salary cannot be accessed and are planning for retirement sooner.

The CoreData “Trends in SMSFs June 2014” report said based on newly established SMSFs, the age distribution of SMSF members had changed drastically in the past nine months, with 62.1 per cent aged between 34 and 54, compared to only 36.6 per cent of SMSF investors in that group in July last year.

SMSFs and ‘new boomers’

New boomers are starting to make an impact in the highly lucrative superannuation industry. SMSF members aged 25 to 34 now make up 11.1 per cent of all SMSF members, compared to 4 per cent almost a year ago. The jump translated to about 111,775 SMSFs members in that age group. SMSF members aged from 35-44 made up 29.9 per cent of all members as opposed to 12.7 per cent in July 2013.

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No only is there an increase in ‘New boomers’ however there is now a connection with high income earners with 20.5 per cent earning between $100,000 and $200,000 in March 2014, compared to 14.4 per cent in July 2013, representing an increase of 61,425 members.

Where are news boomers investing?

When it came to asset allocation, stocks continue to be a popular choice representing 32.1 per cent followed by 28 per cent invested in cash. No surprises there, the eye-opener is that SMSFs are investing offshore with a 3% growth in overseas residential property in the last quarter as well a 2.6 per cent increase in overseas shares. This is compared to a 1.6 per cent increase in Limited Borrowing Recourse Arrangements, which has been receiving free press on a daily basis. These figures are telling us that more attention should be paid to overseas investments rather than borrowing to invest in residential property, which has been blamed for a possible property bubble.

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Ivan Filipovic

Ivan Filipovic is an experienced, independent Property, SMSF and Finance Expert and the founder of Redwood Advisory. Ivan has been educating and coaching investors for over 15 years and has built a successful property portfolio with a number of positive geared properties across Australia.  Ivan provides valuable and honest guidance by educating Australians on how to invest successfully protect yourself with knowledge, contact Ivan today for a complimentary consultation on 1300 790 110 or email ivan@redwoodadvisory.com.au

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