Ep 411: Should you invest all your super into an internally geared ETF

Pre-order Wealth by Design HereRead Full Blog HereSuperannuation's enforced long investment horizon is one of the most underused structural advantages available to Australian investors. This blog examines whether internally geared ETFs have a role to play within super, and backs the analysis with detailed financial modelling rather than theory alone.The numbers are compelling. A 30-year-old with $200,000 in super, contributing $20,000 per year and investing in a geared diversified ETF via an SMSF, is projected to retire with a balance of approximately $4.3 million, more than 26% higher than an equivalent ungeared strategy in a low-cost industry fund. The benefit is most pronounced for younger investors with larger balances, longer timeframes, and higher contribution rates. As retirement approaches, the case for gearing weakens materially.But the strategy carries real risks that deserve equal attention. Volatility is amplified; a 50% market fall in a 35% geared ETF produces a balance decline of around 77%. Sequence-of-returns risk can turn a strong strategy into a poor one, depending on when a major correction occurs. And the cost and compliance obligations of running an SMSF add a layer of responsibility that should not be taken lightly.The blog also surveys the available geared ETF options in Australia, covering diversified and single-market products across a range of gearing levels. The conclusion is clear: gearing inside super can be genuinely attractive, but is best treated as a complement to ungeared strategies rather than an all-or-nothing decision.My new book is available for pre-order now: Pre-ordering the book will help me get it into bookstores. So please do me a favour - please consider pre-ordering now - links and pre-order bonus are available here: https://prosolution.com.au/book-preorder-bonus Do you have a question for the podcast? Email us at [email protected]. If you're interested in working with our team and me, discover how we can work together here: https://prosolution.com.au/family-office-servicesIf this episode resonated with you, please leave a rating on your favourite podcast platform. Subscribe to my weekly blog: https://prosolution.com.au/stay-connected IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.