Is Your SMSF Cash Losing Value Without You Realising?
How One Business Owner Took Action Before Inflation Took a Toll
Many business owners understandably prioritise liquidity — especially when their SMSF owns the commercial property their business operates from. Having access to cash feels safe and prudent.
But recently, we worked with a client who discovered that “safe” wasn’t necessarily “smart”. SMSF Cash Losing Value is and will be becoming more and more common if you are not investing in the right sectors and assets.
⚠️ SMSF Cash Losing Value
During a review of their risk insurance arrangements, we noticed their SMSF was holding several hundred thousand dollars in cash. While maintaining a healthy cash buffer is wise, this amount far exceeded what was needed for liquidity or contingency purposes.
Once we walked through some simple math with the client, it became clear:
- With inflation running at approximately 7% per annum, the purchasing power of cash halves in just over 10 years (using the Rule of 72).
- That means $500,000 sitting in cash today may only buy $250,000 worth of goods or services a decade from now.
- Why? Because inflation acts like a “stealth tax” on savings, and the ongoing expansion of the money supply dilutes the value of uninvested cash.
After understanding this, the client agreed it made sense to invest the surplus (beyond their required reserves). We recommended a diversified share portfolio within their SMSF. Not only does this aim to outpace inflation over the long term, but it can also generate:
- Ongoing dividend income
- Valuable franking credits
- Capital growth opportunities
Instead of “melting away”, their cash is now working — aligned with their retirement goals and risk profile.
⚠️ Lesson re SMSF Cash Losing Value:
If you have large amounts of cash sitting in your SMSF — or elsewhere — it might be time to review whether it’s really serving your financial goals. The cost of doing nothing could be more than you think.
📩 Want us to review your SMSF cash strategy or investment mix? Reach out for a Financial Health Check today. Book here
Immature asset classes in the financial sector are an exciting and emerging market and we are currently preparing for this new arena. Our role to stay ahead of digitization and digital assets in the financial services industry to help you develop a solid transition and or succession plan to prevent your SMSF cash losing value.
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Along with a solid plan and regular reviewing is required now more than ever to identify your needs, market opportunities and potential growth areas to keep you thriving now and post–retirement.
Having a strategy to build and preserve your wealth is the number one thing you need to do and focus on now because your financial future landscape is definitely changing. No longer is the traditional way of earning money going to build our wealth. It is a sad and harsh reality!!
Because let’s face it, what you can buy today with your standard of money won’t buy that same thing in three years time. The value of your money is ever decreasing. Read more on that here
These are all questions that need answering now or you will get left behind.
What cost you $… now, those same $$$ will not buy half that worth in a few years.
So what do you need to do now to stop this reality?
Planning, knowledge and action is power! 🚀💪
If you want to know more call us on 08 7111 0022 or book a chat here.
Arthur Panagis
Author, Founder, Wealth Coach and Financial Strategist
B.Bus (Accounting)
Grad Dip (Financial Planning)
Professional Certificate in Self Managed Super Funds
ASX Listed Equities Accreditation
Tax (financial) Advisor
REMEMBER, action is power!
💪 We want to make the rest of your life the best of your life.
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Suite 2, 148 Greenhill Rd,
PARKSIDE SA 5063
Ph – 08 7111 0022
Email – info@fmgws.com.au
Disclaimer: This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.
