A lot is being made out of the SMSF’s risk of borrowing. Funnily, and it cannot be a coincidence, that most of the vitriolic attack is launched by the big funds which have suffered immeasurably due to the growth of the SMSF industry. Now, the only avenue left to them is to malign SMSF. So, they talk about SMSF’s borrowing risk, lack of prudential regulations, and tax evasion, among other things. Let’s go through some of the illogical claims made by the SMSF attackers.
Claim 1: Property market might get affected
Unfortunately, a majority of points that they choose to attack the SMSF industry on fly on the face of reasoning. They say that SMSF borrowing will affect the property market. Free market economy permits each investor to analyse the risk-benefit equation and act accordingly, keeping his personal risk propensity in mind. So where does borrowing affect the property market over a macro-plane when it does not affect people on the micro-plane.
Claim 2: Investors might lose money
Another argument is that people might lose a lot of money if unregulated SMSF borrowing is encouraged. This is a bizarre statement. Tell me, can the selfsame big funds claiming so can guarantee that they will protect and multiply investor money if their large Super was used instead of the SMSF?
Claim 3: APRA and SMSF dishing out different results
I think the funniest assertion by far has been that SMSF borrowing leads to separate outcomes for people investing in SMSFs and APRAs. Every asset class promises different bounties. Same asset classes running different campaigns promise differently. Why should SMSF promise what the APRA does? I know the root of APRAs chagrin. They feel that their customers are being sabotaged by the SMSF industry. If true, the APRAs need to figure out the deficit in their own selves.
What do you make of the attacks made on the SMSF industry?