SMSF investors need to be smarter
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Samantha Hodge is a journalist with InvestorDaily, a Morningstar publication.
The reduction of concessional contribution caps to $25,000 for all ages will cause self-managed superannuation (SMSF) investors to change the nature of their investments and dampen trends, a SMSF survey found.
Multiport's SMSF Investment Patterns survey shows a steep increase in contributions for the June quarter from $6911 to $12,350 as over 50s made use of their last chance to contribute up to $50,000 in concessional contributions.
However, as the concessional contribution cap has been halved from $50,000 to $25,000 for those over the age of 50, investors will need to be savvier about how to accumulate investments.
"This may actually change the nature of what [investors] get out of their super from an investment performance viewpoint," Multiport head of technical services Philip La Greca told InvestorDaily.
"I suppose if you've got less then they [will think] 'I have to work harder to get to my target'. So it may mean they become even more focused on how the money is invested and what they want it to perform."
The lower caps are also likely to dampen SMSF contribution cap spikes traditionally seen in the June quarter, the report said.
"What we would anticipate is that with the effective halving the spike we normally see in June won't be as significant as it was," La Greca said.
"The bulk of it [will still] come in June but the spike will be nowhere near as significant simply because you'll only have $25,000 to play with."
According to the report, the June quarter also saw cash holdings increase 4 per cent as a result of marking volatility and also from the increased level of contributions made by members.
La Greca said he expects cash holdings will also decrease as a result of the level of contribution.