Labor failed to get its legislation to tax the earnings on SMSF portfolios exceeding $3 million pass the Senate in the previous Parliament. With the Greens likely to support this Bill, it is now set to become law, and advisers are scrambling to devise strategies for their clients.
With the aid of Google maps, driving around Italy seemed the obvious way to go – until numerous fines started landing on my Melbourne doorstep. My advice? Grit your teeth and pay.
Self-funded retirees testing the waters in the crypto pool
As cryptocurrency has grown as an asset class, senior Australians haven’t been immune to the buzz with asset allocations to crypto in self-managed superannuation funds (SMSFs) growing over the past five years.
Rachel Lucas (pictured), head of marketing and communication at digital asset platform BTC Markets, puts it succinctly. “As of March 2024 [the ATO] reported that SMSFs held about $1 billion in cryptocurrency assets, a 400 per cent increase from 2019.
“Obviously, that’s based upon the growth in cryptocurrency, specifically Bitcoin, over time. [Bitcoin] tends to be the biggest asset that seniors, all that older demographic, tend to gravitate towards,” she says.
Lucas adds that the crypto exchange traded funds launched by big names such as Blackrock and Fidelity in the US are creating a level of comfort and familiarity around cryptocurrency for seniors.
BTC Markets has noted an upward trend in 60-year-old plus investors opening accounts over time and finds that these investors often have larger initial deposits, potentially reflecting their larger overall wealth.
“One thing that we do find, though, with that older demographic is that are less active, they don’t trade in and out. They’re not rolling over their assets like the younger demographics do,” she says.
In terms of their overall asset allocations, Lucas says that anecdotally they are hearing that it is generally small, around two to five per cent of a portfolio.
National Seniors Australia (NSA) chief executive officer Chris Grice suspects that while there are some seniors interested in crypto as an asset class, most are more conservative.
“There’ll always be a cohort looking for the quick win. And it doesn’t matter whether, even if it wasn’t crypto, when the market is paying for term deposits, they’re paying four per cent, and you’ve got some other investment that’s paying eight or nine per cent … there’ll always be some that will sail a little bit closer to the wind, as it were, and look to that,” he says.
“But what they need to appreciate, and we always remind them at every opportunity, is that with investments there is risk, and you can’t substitute getting good advice and support in that regard and talking to an adviser, especially if you’re talking large amounts.”
He says that it appears a lot of crypto investing is promoted via social media. As for seniors being overexposed, he says it’s too early to tell.
“Is it a bit like an iceberg? Is what’s sitting under the surface what we don’t know, because at this point there hasn’t been, you know, a ‘correction’. When that occurs, that’s when, suddenly, the complaints start to come out.”
He also points out that scams, which older Australians can be more susceptible to, often centre around cryptocurrency and that seniors are right to be sceptical.
Founding partner at private wealth management firm Stellan Capital, David Leon, mainly deals with high net to ultra-high net wealth sophisticated clients. He says that currently their older clients have a very low level of interest in crypto as an asset class.
“Crypto currency is an alternative asset class and should be viewed in line with other alternative asset classes (i.e. wine, fine art, horses),” he says.
“Although some draw parallels to gold as an alternative to the US dollar, there are technical difficulties in taking this analogy too far, in that crypto has no physical backing nor regulatory support/infrastructure (for now),” he says, stressing that crypto should still be seen as highly speculative.
Josh Lee, a director and financial adviser at Link Wealth Group, says that his clients are generally split in terms of their interest in crypto.
“Fifty per cent dismiss it and laugh at the prospects of investing in crypto and are relieved to know we don’t recommend it. The other 50 per cent are more open minded to have some exposure into the future and I’d say more and more clients are leaning into this bucket as the crypto market expands,” he says.
But he also thinks that it is herd mentality or FOMO that is leading them to invest in this asset class.
“Most everyday investors investing in crypto really have no strong conviction as to why they are investing other than that it seems like the right thing to do and they don’t want to miss out on possible life changing returns they may have hear of,” he says.
