4 reasons SMSF investors can beat the investment professionals

Over a million Australians have walked away from regular superannuation funds and taken control with a self-managed super fund (SMSF). So could you do a better job than the industry insiders? Here are four reasons why it may be easier than you think.

1. Lower fees mean more super

The average retail super fund can eat up as much as 1.2% of your hard-earned savings in fees every year - and that can have a huge impact over time. According to a Rainmaker analysis commissioned by ING Direct, superannuation fees cost the average Australian $2,000 annually. And because traditional super funds charge fees as a percentage, the more you save, the more you pay.

As a result, super fees could cost you up to a third of your savings over your working life.

Compare that to ESUPERFUND's annual fee of p.a. for an SMSF. If you and your family start with a balance of $100,000, that's equivalent an annual fee of just 0.89%. Even better, as your super grows, the percentage you pay in fees keeps on shrinking.

2. You don't have to follow the herd

In his million-selling book One Up on Wall Street, legendary investor Peter Lynch argues that DIY investors have a huge advantage over the professionals, because they can avoid running with the herd.

SMSF Investors

For professional managers, it can be better to end up with the same middling returns as everyone else, rather than risk going it alone. It's one reason so many funds achieve average results, essentially tracking the market, minus fees.

But when you take control with an SMSF, you can make your own way by seeking out undervalued opportunities, rather than investing alongside everyone else.

3. You can buy and sell when the time's right

Fund managers have another handicap. When money flows in or out of the fund, they have to buy or sell, no matter what the market's doing.

For example, when a manager's mandate says they'll invest in Australian shares, then they have no choice but to start buying when quarterly super contributions roll in, even if they think Australian shares are temporarily overvalued. That's not a recipe for success.

But as an independent investor, you can buy and sell when the time is right.

4. You can find the best deal

Business journalist Michael West recently revealed that clients of some of Australia's biggest superannuation companies are missing out on extra returns, simply because their fund managers invest their cash exclusively in accounts operated by their big-bank parents. His investigation showed fund members could earn up to 1.3% pa more, simply by seeking the best term deposit in the marketplace.

That's the advantage of running your own fund. Rather than being tied to a single institution, you can search the market for the best deals.

Find out more

If you think an SMSF might be for you, read more about the benefits of running your own fund.

Before you start

An SMSF can be a great vehicle to take back control of your Super but an SMSF may not be right for everyone. We have conveniently summarised other factors to consider when contemplating setting up an SMSF here. We also assist you in understanding what is involved in the ongoing management of your SMSF via our Free SMSF Learning Centre here.

If you want to learn more about SMSFs, download an information pack today.

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"ESUPERFUND makes the running of my SMSF smooth and enjoyable because they prepare everything we need."
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