Property investment is more than twice as profitable as a balanced superfund, according to property group Raine and Horne.
The company's chief executive Angus Raine said Australians are better off investing in bricks and mortar rather than a balanced super fund, which relies heavily on Australian and foreign stocks.
“While industry statistics regularly suggest that between 70 and 80 per cent of workers have their super invested in a balanced fund option, what many workers don’t realise is that the term ‘balanced’ fund is a misnomer," he said.
“A balanced fund invests in a mix of local and international asset classes such as shares, bonds, listed property and cash. Yet despite the term ‘balanced’ these funds often have 60 to 70 per cent of their members’ money invested in high risk markets such as Australian and international shares.”
According to Mr Raine, in the last 10 years Australian shares have recorded average annual gains of just 6.8 per cent, while international shares have returned an average annual loss of 2.8 per cent.
“Over the last decade, investors in balanced super funds have experienced a modest annual return averaging just 5.1 per cent,” Mr Raine said.
Meanwhile, the average annual property returns up to 11.04 per cent - more than double the return on balanced superfunds.
But while the returns on property are definitely better, Mr Raine said the property market was not without its risks.
“It takes time to sell a property, so people can’t simply bail out if the market experiences a soft patch. This takes a large degree of volatility out of the property market,” said Mr Raine.
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