Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 672

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
  •      
  •   

 

Leave a Comment:

RELATED ARTICLES

Why I object to ‘hitting a number’ for retirement

The diversification illusion: why 'balanced' portfolios may be exposed

Do HNWI get better advice?

banner

Most viewed in recent weeks

The strange effect of the 30% minimum capital gains tax

The 30% minimum tax on capital gains sits at the heart of the budget's proposed reforms. Yet the mechanics reveal anomalies that introduce unexpected distortions that raise questions about its design.

High quality businesses are on sale

Beneath the dominance of the ASX's largest stocks, much of the market has been left behind. High-quality companies are now trading at levels rarely seen, offering opportunities for investors willing to look deeper.

Does your will qualify for the discretionary testamentary trust exemption?

Treasury has confirmed the exemption many families were hoping for. But buried in the fine print are two conditions that could leave some wills on the wrong side of the exemption, despite years of careful planning.

Ranking three common retirement strategies

The defining challenge of retirement isn't just about building wealth, it's about converting your lifetime savings into sustainable income. A holistic understanding of different strategies can improve long-term outcomes.

Welcome to Firstlinks Edition 667 with weekend update

The downfall of the giant and three lessons for investors.

  • 18 June 2026

Why Australian shares are falling behind the world

Australia’s market boasts a long record of outperformance, but recent results tell a different story. Is the ASX’s lagging performance a temporary setback or evidence that structural forces will keep global markets ahead?

Latest Updates

Superannuation

Are you making these SMSF mistakes?

After four decades advising investors, there are a few common mistakes I've seen SMSF investors make. From holding too much cash and chasing yield to overtrading and trusting tips. Are these errors costing you?

Retirement

Retirement spending is not one-size-fits-all

New data challenges the idea that Australians are underspending their super. The bigger issue may be helping retirees navigate complexity, make confident decisions and use their savings to support security, wellbeing and choice.

Taxation

The missing link in the CGT debate

A little-noticed consequence of Labor’s tax changes could have implications well beyond investors’ tax bills. The issue raises bigger questions about incentives, capital allocation and the drivers of long-term economic growth.

Investment strategies

The surprising beneficiaries of the AI boom

While markets obsess over AI winners, a larger, more predictable growth engine is forming. A surge in electricity demand and infrastructure build‑out reveals the quiet, durable assets evolving beneath the AI story.

Superannuation

When losses in super become irreplaceable

The notion of 'you can afford more risk' assumes that losses can be replaced. Above a $2.1 million super balance the law says otherwise, and a worked example shows the refill takes decades, or never happens.

Retirement

Why I object to ‘hitting a number’ for retirement

Many investors dream of “hitting their number” and walking into retirement. But what if reaching that milestone is the moment they should be asking the tough questions? After all, there's a lot more to life than a high portfolio value. 

Planning

Does your will qualify for the discretionary testamentary trust exemption?

Treasury has confirmed the exemption many families were hoping for. But buried in the fine print are two conditions that could leave some wills on the wrong side of the exemption, despite years of careful planning.

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.