Kate Cowling writes a piece for the website www.afr.com wherein she says that portfolio picks for different SMSF investors remain more or less the same. Nearly all of them show a disposition towards keeping half of their portfolio in equities; with the baby-boomers showing just a little lesser appetite for stocks.
18 shares in a portfolio on an average
On an average every SMSF has 18 shares in its portfolio and the mix is also quite similar. Most of the trustees have the top four banks and Telstra in the mix. There is this tendency to stick to the big guns because these shares are good in terms of yields and do not offer much volatility. Naturally, the investors, especially the baby boomers, like them.
4 big banks and Telstra may not help, feels Cowling
Cowling however feels that the retirees in particular won’t be best supported by such stocks if they look at a 20 year horizon. True that the yields for the blue-chip stocks can be stunning at times but their growth is at best moderate and this may not hold them well in the pension phase.
Needs are different for the accumulation and the pension phase
You can still make do in the accumulation phase, says Cowling, but with the present low cash rate, the growth can hit you big in the pension phase. If the retirees look at a 20 year picture, they will concede that high-yield, low dividend/share stocks are not the ideal ones. Of course, it is up to your financial adviser to tell you this.
Growth not yield has been a problem
If you want to rethink about your large-cap stocks but are not doing so, here is something for you, says Cowling. Many of the large-cap stocks are growing via cost-cutting and the growth has got nothing to do with their revenue generation. It is becoming more difficult by the day to find growth and limiting oneself to the blue-chip companies won’t certainly help you find it, feels Cowling
You can read the original article here.
I think that the SMSF sector is not something where you can experiment too much. You need financial acumen for sure and yet a capable financial planner is not a guarantee for success. On top of it there are compliance issues to tackle and a lot many regulations and guidelines to adhere to.
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