The Australian Prudential Regulation Authority recently revealed that around $10 billion of Australians' retirement savings are locked in underperforming superannuation products, with fees for the largest industry super funds rising nearly 20% over the past three years. So, with more money going out than coming in, given the cost of living crisis, is it time for investors to consider switching to a self-managed super fund (SMSF), and is it a suitable option? Wealth Within's Dale Gillham looks into it and examines the stocks to watch.
While an SMSF offers greater control over your investments and the opportunity to enhance returns, it’s not for inexperienced investors without the right knowledge. One of the most important criteria for your SMSF's success is demonstrating that you can invest profitably before moving away from traditional superannuation.
It's also critical that you understand how to select the right type of stocks, which are solid companies with a long trading history. It's not about high-risk, high-reward speculative stocks, but about taking safe risks and being active in managing your portfolio.
Three mid caps to watch when considering an SMSF
If you feel ready to make the switch, or if you are already managing your own SMSF, here are three mid-cap stocks that could be excellent additions to your superannuation portfolio.
- Washington H. Soul Pattinson Ltd (ASX:SOL): This diversified investment company has interests across various sectors, including telecommunications, financial services, building materials, and resources. Since 1998, its share price has consistently trended upward despite the occasional downturn. Historically, SOL has shown a pattern of reaching new all-time highs every four to six years. It’s been three years since the last all-time high, making SOL a promising proposition at current price levels.
- Next is AGL Energy (ASX:AGK) Ltd: As Australia’s largest energy provider, AGL has a trading history dating back to the mid-1980s, demonstrating its resilience and long-term viability. The share price has recently surged over 90% from a long-term support level of $5. If this upward momentum continues, the potential return to its all-time high of $28 presents a compelling growth opportunity, making it a strong candidate for a super fund.
- Lastly, Cleanaway Waste Management Ltd (ASX:CWY): With a growing population and increasing consumerism, the demand for waste management services is rising. Cleanaway has stabilised and shown a positive trend since 2015, after a volatile start following its ASX listing in 2005. The share price has recently broken out of a two-year consolidation period, indicating the potential to return to its long-term uptrend, making it a perfect stock for a superannuation strategy looking to outperform.
Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au