Hi Scott,
My husband and I are in our early 50s with about $1 million each in our SMSF. Sounds impressive, but here’s the embarrassing part: over the last five years, our return has been just 1%. That’s before fees and tax. Basically, we’re going backwards.
We bought and sold a property inside the fund years ago, but since then it’s just sat in cash. We’re hopeless investors. We’ve decided to close the SMSF and move everything into an industry super fund. But I’m scared. Moving the entire balance feels like throwing a couple of million bucks into the sharemarket in one go, which goes against your advice about drip-feeding investments to reduce risk.
My current plan is to roll it into an industry fund, split between cash and index options, then gradually shift more into shares over time. But, with markets so shaky, I’m terrified of buying at the top and losing a chunk overnight. What would you say to people like us – ready to close their SMSF but super scared (pun intended) to make the leap?
Linda
Hi Linda,
Don’t be embarrassed! You’d be shocked how many millionaires I know with piles of cash just sitting there, too scared to move.
You’ve done really well. You’ve built up two million in super between you, but right now, you’re just hoarding it and playing defence. It’s time to get on the front foot.
So hire a good fee-for-service advisor. Pay them a decent hourly rate. Find one who’s evidence based and sticks to low-cost index investing. If they’re any good, they’ll be worth their weight in peanut shells.
You’ve got at least 15 years before you’ll even start drawing down on your super. That’s plenty of time to ride out the ups and downs of the market and grow your balance further. Get the advisor to put together a proper plan to turbocharge your super – by saving more and investing it smarter.
Right now, you’re worried about investing at the top. If dumping it all in makes you nervous, talk to your advisor about drip-feeding it in over six months. You’ll average out the ups and downs and sleep better at night. Sitting in cash earning 1% while inflation of 2.5% (or more) quietly eats it away isn’t safe.
It’s just slow-motion losing.
Start today.
Your future self will thank you.
Scott