Distrust in super funds sees Millennials and Gen Z leading SMSF charge
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Among key findings were 47% aged under 35 have an SMSF. The trend is relatively new with 67% of respondents indicating they have been building their fund for just 1-5 years.
That puts Millennials and Zoomers in pretty stark contrast to their parents and grandparents, with 35% of Gen X (41-56-year-olds) and 50% of Baby Boomers (57-75-year-olds) not ever planning to have a SMSF.
A bit over one third of Millennials surveyed contribute between $5K-$10K annually to their SMSF, while 50% of Zoomers contribute $1K-$5K annually.
Just 16% of people under 35 will contribute more than $10K to their fund.
So, why the shift from traditional super funds towards SMSFs? Simply, a lack of trust – M&Zs are more confident of generating better returns themselves than with a super fund.
The survey found 33% believed they can get a better average return managing their own super than with a traditional fund with 37% keen to invest in their future and 40% wanting to prepare a nest egg for retirement.
Taking control of their financial future M&Zs are more likely to invest in Bitcoin and big tech than property. The survey revealed 43% of Millennials plan to invest their SMSF into crypto, while 64% of Zoomers plan to invest their SMSF into crypto.
Among other key findings were:
52% of Zoomers believe technology stocks have the most potential over the next 12 months
80% of Millennials believe Bitcoin has the most potential over the next 12 months
75% of Zoomers believe Bitcoin has the most potential over the next 12 months
41% of Millennials plan to invest their SMSF into real estate
50% of Zoomers plan to invest their SMSF into property
Of Millennials invested in stocks, 45% prefer the ASX market and 32% opt for US markets. The opposite is true for Zoomers with 47% favouring US markets and 29% the ASX.
Tech, energy, real estate and financials were the industries of choice for both. Healthcare was a priority sector for Millennials and materials sectors a focus for Zoomers.
Young investors also tend to shy away from instruments with higher perceived risk like CFDs, options and FX.
Influenced by long-term returns and expert industry sources, 28% of Millennials and 35% of Zoomers tend to rebalance their SMSF portfolios once a fortnight.
Despite the appetite to self-manage their super, young Aussies say lack of information and education are the biggest barriers to self-managing with 42% Millennials and 40% of Zoomers not knowing where to start.
There was around 36% of Millennials and 38% of Zoomers who didn’t know how an SMSF works, while 33% of Millennials and 29% of Zoomers prefer someone else to manage their super on their behalf.
But eToro Australia’s managing director Robert Francis said Aussie M&Zs are increasingly taking their superannuation and finances into their own hands.
“They are realising the importance of investing younger than their parents – many as soon as 18 – in order to put themselves in an advantageous position for a comfortable retirement,” Francis said.
He said for those unsure about whether to invest in an SMSF, eToro has tools and support teams available to help guide them through the process.
“We encourage them to gain the knowledge they need to make the decisions that suit their personal situation and risk tolerance,” he said.
If you’re curious as to how much super you should have for your age or why some people will need more funds than others, check out our article with The Association of Superannuation Funds of Australia (ASFA).