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<\/p>\nMore than 5.2 million young Australians are missing out on higher superannuation returns by investing their retirement savings in default MySuper accounts, according to research from Innova Asset Management.<\/p>\n
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The analysis reveals that an all-equities portfolio spread across Australian shares and unhedged international shares outperformed the typical MySuper \u2018balanced\u2019 fund by 13.6 percentage points over the decade ended September 1, 2023.<\/p>\n
Innova\u2019s analysis reveals Australians under 40 years hold more than 10 million MySuper accounts, so typically face a 25- to 45-year investment time frame before their super is accessible.<\/p>\n
It has compared their performance to an all-equities portfolio consisting of Australian and international shares.<\/p>\n
Dan Miles, managing director and co-chief investment officer, said MySuper funds which default to a \u201cbalanced\u201d type of portfolio typically were found to underperform an all-equities portfolio because insufficient risk was being taken given the time horizon of investors, many of whom can afford to take on more risk given their relatively young age.<\/p>\n
\u201cMySuper products were designed to cater for a largely disengaged customer base given superannuation\u2019s distant payoff,\u201d he said.<\/p>\n
\u201cThose least likely to be engaged \u2013 and so invest in default MySuper products \u2013 are young people with lower education, those on lower incomes and people with lower financial literacy.\u201d<\/p>\n
Mr Miles said retirement savings being allocated to a superannuation offering that is not in line with an investor\u2019s long-term goals is growing and suggests there is a great opportunity for financial advisers to expand into a younger client base to advise them on taking on higher equity risk investment options.<\/p>\n
\u201cThis is another window into the ongoing issue of financial advice accessibility. Younger Australians who are by default investing in MySuper products would be better off with financial advice,\u201d he said.<\/p>\n
\u201cThis represents an opportunity for financial advisers to offer more affordable and scaled financial advice to young Australians.\u201d<\/p>\n
Analysis\u00a0reveals that almost 250,000 Australians (or 233,000 people) aged 30 to 34 years hold between $100,000 and $499,999 in MySuper accounts. Meanwhile, more than half a million (597,000) Australians aged 35 to 39 years also have the same amount invested in MySuper accounts.<\/p>\n
\u201cYounger investors will need to generate more wealth through superannuation to allow them a comfortable retirement income,\u201d he said.<\/p>\n
\u201cWhile younger investors have the benefit of longer working lives and a rising superannuation guarantee, they will need stronger long-term returns.\u201d<\/p>\n
He added that many people currently rely on property to build wealth, but for many, especially younger investors, allocating to a property is out of reach as the cost to buy a property is too high.<\/p>\n
\u201cThey would be financially better off investing more of their savings to assets such as equities \u2013 and importantly for superannuation, appropriate investment options,\u201d he said.<\/p>\n
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Keeli Cambourne
\n04 January 2024
\nsmsfadviser.com<\/p>\n","protected":false},"excerpt":{"rendered":"
More than 5.2 million young Australians are missing out on higher superannuation returns by investing their retirement savings in default MySuper accounts, according to research from Innova Asset Management.<\/p>\n","protected":false},"author":1,"featured_media":1748,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[],"_links":{"self":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1747"}],"collection":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/comments?post=1747"}],"version-history":[{"count":1,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1747\/revisions"}],"predecessor-version":[{"id":1749,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/posts\/1747\/revisions\/1749"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media\/1748"}],"wp:attachment":[{"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/media?parent=1747"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/categories?post=1747"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/actinvest.com.au\/index.php\/wp-json\/wp\/v2\/tags?post=1747"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}