Gen Z and Millennials leading SMSF charge

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on April 20, 2022 Fact Checked
Gen Z and Millennials leading SMSF charge

Gen Z and Millennials are just as likely as Boomers to invest in SMSFs, according to a new survey from investing platform eToro.

From the 1,000 Australians surveyed, almost half of people under 35 years old (47%) have an SMSF.

This trend is relatively new as the majority of respondents (67%) have been investing through their SMSFs for one to five years.

This differs from data provided by the Australian Tax Office, which suggests just 3.3% of SMSF members were under 35 as at the end of last financial year.

There are currently over 600,000 SMSFs with total estimated assets of around $876 billion in Australia - accounting for almost 25% of super funds - according to the Australian Tax Office.

Nine in ten respondents under 35 in eToro's survey rated superannuation as 'important'.

They also rank investing for the future (37%) and preparing for retirement (40%) high on the importance list.

A third (33%) of people under 35 believe they can get better returns by managing their own super, with 36% contributing between $5,000 to $10,000 into their SMSFs each year.

Another half (50%) invest between $1,000 to $5,000, while 16% are contributing more than $10,000 to their funds.

Median asset value per SMSF member, according to ATO figures, amounted to nearly $415,000 at the end of June 2021.

Average member contribution amounted to just over $21,000 in the 2019-20 financial year.

Lack of information and education a roadblock to entry

Despite the rise of young SMSF investors, 42% of Millennials and 40% of Gen Z said they don't know where to begin when investing in an SMSF.

Additionally, 36% of Millennials and 38% of Gen Z don't know how SMSFs work.

Some young people prefer for someone else to manage their super on their behalf (33% Millennials, 29% Gen Z).

Dale Gillham, Chief Analyst at Wealth Within, believes a number of people will stray away from their industry or retail super funds for SMSFs later this decade.

"Right now, around 28% of all SMSFs funds are invested in listed shares, which means they are important to our stock market," Mr Gillham said.

"But the industry continues to propagate that SMSFs are too hard to manage and too costly to run, although in my experience, it is the exact opposite.

"There are many providers with low cost services that assist SMSF trustees to set up and properly manage an SMSF and with a good education. Anyone can achieve solid returns on their superannuation that either rival or beat many of the managed fund returns."

ATO data suggests SMSFs spent a collective $3.6 billion in admin and operation expenses in the 2019-2020 financial year.

Young people prefer stocks over property

Millennials and Gen Z are also more focused on investing in stocks (60% Millennials, 72% Gen Z) and crypto (43% Millennials, 64% Gen Z) over property (41% Millennials, 50% Gen Z).

In contrast, more than half (54%) of respondents over 45 years old have at least one property in their SMSF.

Young SMSF investors are focused on generating diversified SMSF portfolios (84% Millennials, 75% Gen Z), leaning towards tech stocks as their investment of choice.

Almost half (45%) of Millennials prefer investing on the Australian Stock Exchange (ASX) while 32% opted for US stocks.

On the other hand, Gen Z favour the US stock market over the ASX (47% compared to 29%).

Listed shares were the dominant asset class held in SMSFs at a collective $240 billion according to ATO data.


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Lender

Variable
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SELF MANAGED SUPER FUND LOAN
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SELF MANAGED SUPER FUND LOAN

SMSF 80

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Variable
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  • Easy refinance process
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Ocean SMSF (No Offset) (Metro) (Principal and Interest) (LVR < 60%)

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
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  • Easy refinance process
  • No application fee and no settlement fee
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SMSF 70 (Refinance)

  • Easy refinance process
  • No application fee and no settlement fee
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Variable
More details
  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

SMSF Loan (Interest Only) (LVR < 60%)

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
More details
  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

Liberty SuperCredit SMSF (LVR < 60%)

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
More details
  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees

SMSF Residential

  • Easy refinance process
  • No application fee and no settlement fee
  • No monthly, annual or ongoing fees
Variable
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  • Easy refinance process
  • No application fee and no settlement fee
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SMSF 70 (Purchase) (New Customer)

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  • No application fee and no settlement fee
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Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 26, 2022. View disclaimer.


Image by Chris Liverani on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered. Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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Rachel is a Finance Journalist, and joined Savings in 2021. Coming from a background in the FinTech space, her interests include the innovation of lending technology, property, investing, and more. With a passion for educating and informing people about their finances, she hopes to increase the financial literacy of everyday Australians.

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