Aussies overwhelmingly support this investment option. Here’s why

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Property has always been entwined in the national identity. So much so that we consider property ownership ‘the great Australian dream’.

And despite the stock market bouncing back from the first outbreak of the coronavirus, it is also going to take some serious persuading to knock it off the perch as Australia’s most popular investment option.

New research has revealed one in two Australians think that property is the most secure and profitable long-term investment, compared with shares, gold, cash and fixed interest.

With the Reserve Bank of Australia opting to leave the cash rate at an historically low 0.25 per cent, there are no surprises that fixed interest and cash hold little attraction for investors.

But the popularity of property as an investment at this time is so strong that a significant proportion of Australians would choose to invest in property with their superannuation, if they met the criteria required.

According to the results of the survey of 1006 Australians, 62 per cent of those in their 50s and 59 per cent of those over 60 would be more interested in investing in residential houses in their self-managed super fund (SMSF).

An SMSF allows members to invest in direct property, choose the property they invest in, and control their own fund as the trustee.

Forty-one per cent of respondents said these factors make an SMSF attractive for them, with 33 per cent saying they would consider establishing one in the future. Eight per cent of respondents said they already have such a fund. also asked respondents why they had not already set up such an SMSF.

Among those who did not already have one, 28 per cent said they lacked funds in their existing super. A further 19 per cent of respondents admitted they lacked good advice to get them started, 18 per cent said they are not focused on their retirement yet, and 18 per cent said they did not have the time or energy to set it up.

While 42 per cent of Australians said that property was the best avenue for long-term return on investment, shares were not too far behind, with 32 per cent believing the share market will provide the best returns.

An equal 9 per cent think gold and cash are the best investments, and 8 per cent think fixed interest such as government or corporate bonds is the best avenue for investing money long term.

Licensed financial adviser Helen Baker said the results of the survey showed Australia’s love affair with property was unlikely to take too much of a hit during the pandemic.

“The survey findings indicate that Australians are still confident in investing in our property market, despite the swaying effects of the pandemic,” Ms Baker said.

“Our property market has shown resilience over the past six months, with house prices not falling nearly as low as experts had predicted at the start of the shutdowns.

“This high level of confidence is also echoed in the fact that many would invest in property within a self-managed super fund to fund their retirement. However, not many people know how to establish a self-managed fund.

“Starting your own fund is quite complex, with strict guidelines to follow, so I always encourage people to seek qualified advice from a professional. I also advise Australians to do their own research, particularly when investing in real estate.

“While setting up a self-managed super fund can be complicated and time-consuming, it often reaps substantial benefits in the long term for those for whom it may be appropriate.”

Do you have an SMSF? Has it proven to be worthwhile as an investment tool? What do you consider the most secure and profitable long-term investment?

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Written by Ben


Total Comments: 8
  1. 0

    SMSFs investing in residential property is one of the reasons our property values are so overpriced by world standards and while it is so difficult for young people to buy a house.

    • 0

      Not true, Tanker. Not many SMSFs invest in direct residential property (buying a house for rent). It’s actually not easy to do in an SMSF because you either have to engage in a complicated and expensive borrowing legal process or have enough money in your SMSF to pay cash for a house. And even then, it’s problematical that SMSFs are supposed to spread their risk so they should theoretically have enough to hold a lot of other investments as well. Most super funds that invest in property do so through property trusts or similar, and it’s more likely to be commercial or industrial property than houses because houses don’t return particularly well. In any case, any retiree who wanted to invest in property could simply draw their money out of super and do it with private funds – much simpler and less costly in terms of legal and audit costs, and unless they are very rich, no tax difference either.

      And actually, it’s NOT that difficult for young people to buy a house compared with past decades. Prices are higher relative to wages than they have been, but interest rates are at record lows and furniture, cars, appliances, clothing, household linen, kitchenware, etc. all cost a tiny fraction of what they used to cost (relative to wages). Of course houses in prime locations and the big new 4+ bed//2+ bath/2+ living room brick homes that the young typically expect are harder to afford than the 30-yr-old run-down 2 bed cottage that my generation settled for as a first home. But young folk who are willing to crawl before they walk (as we did) have no trouble affording a house and are able to pay it off and move up the ladder far faster than my generation could, given that we paid between 8% and 21% interest.

  2. 0

    China seems to have no problems about investing in Australia buying up critical infrastructure something that will come back to bight us on the bum big time.

    • 0

      Don’t agree, I remember in the early 90s Everyone was dimayed about the Japanese property investments here. It turned out big bonus for our tourism industry who quickly had the necessary infrastructure in the form of hotels, reefboats, island resorts etc in place. Most Japanese built assets were later sold back to Australian companies at a loss. They didn’t know the property market here, same goes for the Chinese. I wouldn’t worry….

  3. 0

    When I was younger, participating in the 1960’s workforce, a simple mathematic of finance indicated that my superannuation was not adequate for a comfortable retirement in the 2000s. While the superannuation is a system whereby one makes contributions for one’s retirement, it lacks a well-defined target for a kind of lifestyle for retirement. In the absence of a target and a crystal ball, it is difficult to understand how secured are we, using superannuation as a saving system. This more so, when the superannuation relies so much on the capital market products. The vicissitude and the volatility of the share-values are not for the faint-hearted. The investment strategy for this type of investment vehicle is a long term prospect with a balanced and well-hedged portfolio. Investments in these products for SMSF can be tedious and time-consuming.

    Australia is a growing country, both in terms of economy and population by birth rate and by migrants. Its location in the Asian region has comparative and logistic advantages over the Western World in Europe and the USA. The gigantic consumer markets in China, India, and Indonesia have yet to be opened. Australia as a base for business technology, financial centres, supply chains, medical science, tourism and entertainment, it offers unlimited potentials for commercial and residential development.

    It is most important all three levels of government must have the codes and standards right for construction to have confidence in the building industry. The regulations and reinforcement over the codes and standards are fit for purpose. Investment by global enterprises in Australia can only be confident and secured if they see our citizens and migrants are given opportunities to succeed and to feel safe.

    Properties as an investment is an Australian’s dream. This dream can be a nightmare if it is anything like Opal and Mascot Towers. We certainly don’t want this type of property for your SMSF.

  4. 0

    Most industry super finds alrady have commercial real estate incorpoated into their ‘stock standard’ ‘balanced’ funds and have options to increase investment in that real estate for individual. Interesting to note that many industry super funds quite happily tick over in the 7.5 to 8.5 area over 5 to 10 years, even allowing for the pandemic, all the while mainly focussing on local and international shares. If they aren’t into residential real estate, one has to ask why individual would. Perhaps dividends and franking credits from shares outweigh exposure to such markets? (As for low interest cash, fixed interest and non dividend gold…)

  5. 0

    My residence is free of debt. I have a substantial SMSF which invested both in Australia and Internationally. The investments are spread across property, shares, bonds and cash. Since June 2019 I have had to take 2.5% as non taxable income (usually five percent) but the returns to the fund is still ahead of the 1 July 2019 valuation. So there is merit in a variety of assets in a variety of countries.

  6. 0

    I am invested in a very low cost Industry fund, annual fees total 0.22%. I have no vacancies,no bad tenants, no repairs,rates or insurance, and I do not pay 8% plus for a property manager to collect the rent.

    I am invested only in Exchange Traded funds which are well diversified.
    I am extremely comfortable with watching the markets rise and fall. They are like the tides and the seasons and always settle in the long term. A week of bad weather or a drought does not determine the longer term outcomes.
    I have owned three rental properties in the past which turned out to be a train wreck when compared to my index funds.



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