Investing in shares could give you greater control of your retirement planning.
Historically, Australians seeking greater control of their super have often turned to Self Managed Super Funds (SMSFs) as a means to invest in shares. A study of the investment allocation of Self-Managed Super Funds found that 32% of assets invested in SMSFs are in listed shares (sourced from the ATO self-managed super fund statistical report – June 2015).
However, now that many super funds offer real time share trading, investing your super in shares is now more widely available – allowing you to avoid the compliance and administrative challenges often associated with managing an SMSF.
While investing in shares directly may help you take greater control of your super, take some time to consider the following before you go ahead:
1. The types of investments available
There are many types of investments including Shares, Exchange Traded Funds (ETFs) and Listed Investment Companies (LICs).
Investing in Shares, ETFs and LICs can be a great way for people to take control of their investment strategy within super, by allowing customers a hands on approach to selecting shares in Australian securities and international shares and other types of asset classes such as gold through ETFs and LICs.
Each investment option is unique so do your research before deciding which suits you.
2. The level of flexibility and control that suits you
Depending on your risk profile and stage in life, taking a more ‘hands on’ approach with your investments could deliver valuable rewards down the track.
Investing part of your super in shares offer you greater control over your investments by allowing you to track their performance and trade directly. You can also develop investment strategies that allow you to generate extra income through dividends, grow your capital and focus on specific sectors and markets.
Before embarking on share trading, consider your attitude to risk. While shares, ETFs and LICs historically deliver higher returns over the long term than cash for example, they also carry a higher level of volatility and risk of loss over the short term. You should also be aware of the cost of share trading, liquidity of the investment you make, the consequences of trading too often, too little diversification and the risk of investing in response to your emotions.
You can consider diversifying your investments across a range of securities, such as managed investments, term deposits and shares to help reduce the risk of impacting your investments significantly in the short term compared to investing purely in shares.
4. Any assistance you may need
If you’re not sure which approach is best for you, take a look at the investment information offered by your super fund to see what options may best suit your circumstances.
For tailored solutions relevant to your unique circumstances, consider speaking to an independent financial adviser.
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