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Are you making these SMSF mistakes?

I have been a professional advisor in the stock market since 1982. For half of that time, I’ve been speaking to professional investors, to fund managers, and for the other half, I’ve been talking to self-managed super fund investors trying to look after their own money.

The difference between professionals and SMSF investors is that professionals have made all the mistakes already and don’t make them anymore. I’m going to discuss some common mistakes I see SMSF investors often make.

Playing it too safe

If you look at the average SMSF cash balance, it’s somewhere around 30%. Most fund managers are running at 5% and they might get to 20% in extreme circumstances. If you’ve got a nest egg and are expecting a 10% return, if you only invest half of it, you’ve got to make twice as much to get to your goals. That is cash, not investment. If you’re going to hit your goals, you can’t be too cautious.

Sticking with the same stocks

Something every stockbroker and financial advisor will tell you is when people have been looking after their own super, they turn up with the same portfolio. We call it “the portfolio”. It’s where an investor has gone to the top 50 stocks and crossed out any company that they don’t understand or can’t spell – which is why everybody still holds CSL, BHP and Rio. You end up holding all the banks, Telstra, Woolworths, Wesfarmers, Coles, Fortescue, Aristocrat Leisure, Transurban. It’s an obvious portfolio. 

There’s nothing wrong with the top 20 stocks in Australia. But why bother with all the admin, all those different holdings, when you could just hold a market exposure that will give you the same return in one ETF, or indeed sitting in an industry super fund.

Chasing yield 

The yield trap refers to investors who buy companies with large yields because they’re going to pay a special dividend or pay out more than they’re earning. We’ve got a saying: any stock that yields more than 10% doesn’t, because either the forecasts are wrong and they’re not going to pay it, or what usually happens if there’s one big dividend is the stock, on the day it goes ex-dividend, drops by more than it should because everybody’s selling – because everyone was holding it for the dividend. High yield does not mean it’s a good income stock.

Staying parochial

If you invest for income, you will corral your money into stocks with no growth options, which is why they’ve got big dividend payouts. The banks are fabulous stocks if you want income – sticking to their knitting, no growth options, paying the money back as dividends. Nothing wrong with that.

But if you're focusing on income in the accumulation phase, you're going to be focused on the low-growth stocks, which mean your nest egg is unlikely to grow. There are some fabulous income stocks – if you’re a wealthy retiree looking for income, nothing wrong with the major banks. But if you’re trying to grow your nest egg, income is not the place to be. Do not chase yield if you are looking to grow your money.

Domestic bias 

The next mistake is investing only in Australia. In a world in which ETFs allow you to click a button and buy the S&P 500 or the Magnificent Seven in the same way that you can buy CBA or BHP, why aren’t you doing that? There is much more growth available outside of Australia. The big tech trade, the AI trade, networking, semiconductors – none of that is available in Australia. Australia is essentially a backwater market. With ETFs, you’ve got the option to invest anywhere in the world. 

However, we cannot assume ETFs are all safe and similar. I was playing golf with someone recently and they said, “Oh, I think I’m going to change my approach, I’m going to invest in ETFs.” Which one? They’re not all the same. ETFs are just as complicated as shares. They also require research. Assuming all ETFs are safe because of the simple fact that they’re ETFs is wrong. 

Long term investments and cyclicality 

Another mistake is thinking you can be long-term with cyclical sectors. You probably could be long-term with some of the banks. They’re too big to fail, they’ve got fabulous businesses, they’ve got very little competition, they’re ingrained in the Australian psyche. But I heard somebody the other day saying, “I think BHP is a buy for the next two years.” Things change. Resources, which is a fabulous sector – and it’s fabulous that Australians are comfortable with resources, because there is an enormous amount of money to be made – but be aware, they are cyclical. These are not buy-and-hold stocks.

25% of our market is in the resources sector and people treat them as investments. They’re not. You can’t trade them beyond their commodity cycle. What’s the commodity cycle? Just ask anybody who’s ever bought a lithium stock. It is not a forever sector, but it’s a sector absolutely dripping in opportunity. If you can time the sector, time the stocks.

Paying too much attention to tips

You will find at dinner parties, amongst your friends, if it turns to the stock market, you will hear people tell you about stocks they made money in. This may appear as a tip. It will also probably be done with a knowing nod or a glance or in a whisper that adds absolutely zero credibility to a tip. Most tips are stocks other people are holding.

One of the golden rules of investing is buy it and then tell everybody else about it. If you get a tip, nod, or wave, go and have a look at the stock and make up your own mind – but never buy something because somebody told you to buy it. The likelihood is it’s already gone up, they’ve made money, they were just bragging and you think it’s something clever. Don’t buy stocks without doing a lot of research and taking responsibility for the tip yourself.

The trading trap 

The next mistake is trading too much. This might sound silly. I know there are day traders out there who are probably successful, but day trading is an all-day job. If I made $100,000 a year day trading, I’d see it as a success. But the reality is I could have gone and had a job with a lot less stress and earned more money. It’s a lot of work. I have never seen anybody achieve long term success by being short-term. That doesn’t just apply to the stock market, it applies to life.

If you plan your future by looking at the end of your nose, you’ll never get to the horizon. If you find yourself short-term trading, it is akin to gambling. It may be fun, but will probably cost you and you're unlikely to get anywhere. Put it this way – if my spouse was looking after my super fund and they were turning up at dinner every night going, “Oh, had a win today,” I’d be thinking this person should not be running my money. A more sensible approach to investment doesn’t involve trading short-term.

The mistake that matters most for your retirement

The final mistake is having faith. We used to have a brother-in-law who got into broking. A mentor of his once said, “Don’t touch any buttons, come out for a coffee at 10am, I’ll tell you how to do broking.” What he told him was that when you first arrive in broking, find a company whose share price is less than a cent, that’s got half an idea, buy millions of shares and spend the rest of your career marketing it. 

So he did this. He found a stock, one-sixth of a cent. Every event we went to, family function or Christmas gathering, he would be there talking about this stock. “Have you heard of so-and-so? Have you heard of so-and-so?” We used to call him the zombie, and it was always the same stock. And wow, it went from one-sixth of a cent to 20 cents. He had over a million dollars from putting in just a few grand, and it was fabulous. But one lesson – don’t develop faith, because he still held it when it went to zero.

Stay objective, watch the price – don’t believe the price. When it starts going down, think about doing something about it.

 

This is an adapted version of a transcipt from the Marcus Today YouTube channel. The full video can be found here

Marcus Padley is the author of the daily stock market newsletter Marcus Today, see marcustoday.com.au. This content is general information only and does not consider your personal circumstances. It is not personal financial advice. Please consider whether it is appropriate for you or seek professional advice before making investment decisions.

 

  •   22 July 2026
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21 Comments
Ramon
July 24, 2026

Exactly .

7
Rick
July 27, 2026

Fair enough bottom line is it’s your money you do as you please. Not sure about your analogies though. A pilot doesn’t decide how much fuel to have, it’s the company he works for that tries to minimise the fuel load to save weight and costs and it’s the authorities mandating minimums that decide. As far as planners go it’s in their best interest for clients to have the highest possible balances and any discussion on spending more is about the clients having a better life style while they can enjoy it.

1
MAv
August 07, 2026

AlanB is spot on with his pilot analogy, and pilots could learn from him. The results focused prudent aviator carries a fuel margin appropriate for the conditions, ignoring company pressure and exceeding statutory minimums. After all, if he runs out of fuel, he and his passengers bear the ultimate consequences.
Yet, in personal finance, aviators often make the same mistake as everyone else: assuming politicians, regulators, and financial advisors approach duty of care with the same uncompromising standard.

GeorgeB
July 23, 2026

And what exactly is wrong with holding too much low risk cash when a SMSF generates a healthy surplus over annual spend-in other words what is the point of taking on extra risk to pointlessly increase a surplus.

16
Ramon
July 24, 2026

Remember ; a Broker can hardly not be a Broker , thus talking the book .

Take care . Ramon .

3
OldbutSane
July 23, 2026

Whilst there are some valid comments here, one of the first about professionals (by professional I assume he includes anyone with a licence here) not making mistakes because they have made them all in the past is utter rubbish - look at how many professionals have gone belly up in the last 20 years. And take a look at many managed funds etc too as they haven't exactly bathed themselves in glory. I'd rather play safe with my boring portfolio of mostly Australian shares and wear the (maybe) smaller returns as I'm still earning much more than I can spend on my "boring" portfolio.

14
Rob
July 24, 2026

I went through a period about 10 to 15 years ago during which I lost money as a direct result of foolish advice from licenced financial planners/brokers with a large well-known Australian firm who charged me fees.
I guess that makes them "professionals".
Since dumping them and going it alone (albeit with trustworthy advice and research) with a conservative investment strategy I have achieved returns which have modestly exceeded benchmarks.

8
Xcalbar Nemo
July 24, 2026

I am amazed at how many of my friends use financial advisers and give the impression that is a superior approach to a self-managed approach. The fundamental flaw with the professional adviser model is that they share none of the risks - it is your money and they can legally walk away when things go belly-up as so often happens in long cycles. The hardest part of SMSF investing is being patient and playing the long game. Recent examples of maximising returns include the rise in BHP and APE (APE having since fallen substantially and BHP down a bit). I missed out on hundreds of thousands by moving too early on shared advice.

8
Cam
July 23, 2026

Day trading comment - you're correct

Playing it safe - it depends. If I retired yesterday and would achieve all my retirement goals with $1m earning 5%, if I have $700k I'm going to need most in shares, etc. If I have $1.1m though even though shares are likely to outperform, anything other than cash is risking my life goals. If I have $3m I could put $1m all on race 6 number 6 and be fine. I've oversimplified but the point is every scenario is different.

10
john
July 23, 2026

I understand where Marcus is coming from and his comments are top notch. However I will say the following.
Well over a year ago when trump presented his tariff hikes on other countries I predicted the drop in the market. I was proved right and it was a good time for several months to be out of the market. Similarly when he started a war against Iran this year
I have a strong sense that when Trump’s term ends (or if he is removed beforehand), his billionaire allies, Wall Street interests, and similar power brokers may pull the prop out from under the share market. They could do it simply because they can as a way of proving a point. But more importantly for them to take stock trading advantages in advance. Those powerful interests will also make things very difficult for an ensuing democrat administration.

8
SGN
July 23, 2026

82 Years in Industry so easy to point to SMSF mistakes ,simple No I am not making mistakes as what you suggest. I am comfortable and We make our own decisions. . Are you comfortable with your SMSF ? That is all it matters.Next ?

8
Kerry Smith
July 26, 2026

I got somewhat coerced into creating a SMSF in 2007 just before the GFC. The Financial Planner gave me all sorts of reasons why I should not do the management myself but should leave it up to him. Most of the reasons are covered here by Marcus P. The missing stand out here is that amateurs tend to buy stocks that are flavour of the month or the focus of the news or companies deeply in debt, or Managing Directors who love the limelight. Although I'd had success managing my personal portfolio, I reluctantly handed the management duties, including portfolio construction and buying and selling to him. He gave me a list of 12 or so stocks his broker had recommended. Guess what was on the list. ABC Learning and Babcock & Brown. I baulked at them, but he assured me the broker was professional and knew what they were doing. Well those two went bust and I lost considerable capital. Papers arrived in the mail, which required execution, changing from a broker that was charging $150 a transaction to one charging $80. I sent the documents back unsigned. He rang me and I told him I would be using my own broker in future which charged $20 up to $10,000 or 0.2% above $10,000. He asked if I would still be using him. I reminded him of ABC and B & B. His reply was typically no accountability, reminding me that I had signed a document in all that documentation I had to sign to set up the SMSF, absolving him of any blame. Gutless. I terminated his services immediately.
I have become very cynical of the Financial Planning Sector. Looking back over 48 years in the work force, I have had five negative experiences with Financial Planners and their forerunners, the Life Insurance Sales people.
I have a joke, but I didn't make it up I just modified it.
How do you become a millionaire?
First of all become a multi-millionaire and then hand your fortune over to a Financial Planner to manage.

8
.
July 27, 2026

I was one of those advisers you mention - - not yours personally of course, but in the industry. Big firms, 4 of them, over 30 years. We all have to earn a living, but in the last role, the focus on generating more income from clients was so intense , and caused so much stress ,that I had to retire early. That was 13 years ago. Yes, I do have a SMSF, and very happy to do all the admin for the annual tax return and audit. Keeps the brain active. Looking back on my decades of experiences, I'd be very reluctant to trust anyone else to manage our funds, mistakes or not. You need to own your decisions.
One of the big issues I see , is that the person you would most likely be dealing with has not yet had the life experience that you have had, so this knowledge bank is missing in the overall decision making in setting up the portfolio. Yes, I'm aware that hi tech is making this job a bit easier, but still a robot can't replace a human in this field just yet. And yes, it's not their money, so they can walk away.
The Banking Royal Commission, brought on by a whistle-blower who used to work for the CBA bank, found so many problems in the industry. Reading replies here, and elsewhere, I'm not sure too much has changed. The commission system still exists, and overall fees are still too high.
Self education, combined with appropriate research, investment groups, and lots of patience, seems a good way to go.
Your cynicism of the FP industry is well founded. It's verified by the thousands of so called advisers who left the industry following the Banking Royal Commission.

3
MBA
July 23, 2026

Um. I still think professionals will make mistakes but probably not as many. No one I know , after being in the market for over 50 years , always gets it right. If they did, they would continuously beat the market , which few rarely do. And if they did it would be more good luck than good management. That is the market in a nutshell.

5
Ian
July 24, 2026

Article contains many truths, but to be useful needs to consider 4 questions before even starting to write the advice:
1. How much incoming earnings asset do I have?
2. If these investments were 100% in cash how many years would they last me? (assuming term deposit rates offset inflation)
3. If this amount of cash would last me beyond 95+ years - then how much risk do I need to take (if any, since the surplus will all be inheritance money).
4. If I cannot get to 95 years+, then how much additional return do I need to do that - which then determines how much cash and how much investments/risk I need to take (assuming I want to have more than the old age pension). I always like to have 5 years cash (and maybe for many individuals/couples 30% cash might be 5 years of spending).
All these questions/answers can change considerably as a person/couple move from 65 years to 75 to 85 etc (especially if a RAD needs to be considered.

4
Dudley
July 25, 2026


1. "How much incoming earnings asset do I have?":
Just cashable assets - real net profit from rented dwelling might negligible but likely has a substantial cash value; possibly real capital gain.

2. "investments were 100% in cash how many years would they last me?":
= NPER((1 + 5.5%) / (1 + 4%) - 1, 8%, -100%, 0%)
= 13.88 y.

3. " this amount of cash would last me beyond 95+ years - then how much risk do I need to take":
= none. And Age Pension starts to pay before the cash is all spent.

4. "cannot get to 95 years+, then how much additional return do I need to do that":
Required nominal rate of return, assuming no Age Pension:
= (1 + RATE((95 - 67), 8%, -100%, 0%)) * (1 + 4%) - 1
= 10.97%

4
Dudley
July 23, 2026


"If you’re going to hit your goals, you can’t be too cautious.":

Caution is affordable when saving results in adequate capital.

Save 88%:
= PMT((1 + 5.5%) / (1 + 4%) - 1, (97 - 67), -FV((1 + 5.5%) / (1 + 4%) - 1, (67 - 27), -88%, 0%), 0)
= 195%, income in retirement % of income pre-retirement.

Save 50%:
= PMT((1 + 5.5%) / (1 + 4%) - 1, (97 - 67), -FV((1 + 5.5%) / (1 + 4%) - 1, (67 - 27), -50%, 0%), 0)
= 111%, income in retirement % of income pre-retirement.

Save 12%:
= PMT((1 + 5.5%) / (1 + 4%) - 1, (97 - 67), -FV((1 + 5.5%) / (1 + 4%) - 1, (67 - 27), -12%, 0%), 0)
= 27%, income in retirement % of income pre-retirement.

Sailed past goals, with or without caution, then caution or not no longer matters.

Cash is much easier to count and less 'slippery'. Warren Buffett bathes in it.

3
Dudley
July 23, 2026


More interesting; what portion of net income to save to have the same real retirement cashflow as pre-retirement spending:

= 1 / (1 + FV((1 + 5.5%) / (1 + 4%) - 1, (67 - 27), -1, 0) * PMT((1 + 5.5%) / (1 + 4%) - 1, (97 - 67), -1, 0))
= 31.1%

Adjust preferred rates of return and ages to preference. Ask Claude.

2
Geoff
July 28, 2026

Marcus' comments I consider important. He addresses many issues which self funded members need be aware of such as 1] too safe, thus potentially minimising returns 2 ]holding the same stocks 3] domestic bias, Aust is a very small market 4] buy and hold, particularly with cyclical stocks. I believe the whole article is to make members aware of their bias and suggest the use of ETF'S available today provide opportunities not only for index huggers but theme ETF'S e.g. tech, copper, armaments, world resources all available on ASX

3
HandyAndy
July 29, 2026

Thanks Marcus; some salient reminders about investing that apply both in and out of superannuation. I enjoy these succinct articles that reinforce the big issues.

1
 

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