As co-founder of advisory firm Wealth Enhancers, Sarah Riegelhuth is not afraid to take some investment risks.
How big is your SMSF?
It is about $300,000
How many people in your fund?
My husband Finn Kelly and I.
Why did you start it up?
So that we could have control of our investments, and access to a broad range of investment options.
We have been maximising our concessional contributions for the past few years and will continue to do so, and that helps the fund grow faster.
What types of investments are in your SMSF?
We invest primarily in direct equities, but also have invested in several start-ups in the technology sector too. We’re currently looking at purchasing a property.
We do our most aggressive investing in our SMSF as it is a much longer timeframe.
In terms of your approach ‘aggressive investing’, how do you minimise the risks?
I guess the way we see it, is that it’s all about the timeframe. We are investing for 30+ years (realistically it’s going to be invested for up to 70 years) so for us that takes a lot of the risk out of it. We look at our whole portfolio, both in-and-out of super and anything that is longer term (like property or start-ups) goes within the SMSF.
That way the illiquidity of a start-up investment doesn’t matter as much or the fact that property is a 30-year investment doesn’t matter because we won’t ever want to use those funds (obviously because we can’t legally) for a long time.
We have a large cash position in our personal names, but I wouldn’t really see the point of having a large cash position within the SMSF.
And how have the start-ups come into your radar? How did you find them?
We found the start-ups through our network. We are very well connected within the entrepreneurial community globally. It is a big advantage we have and it is just something that has happened over the past five years.
We are also members of EO – Entrepreneurs Organisation and YEC – Young Entrepreneur Council and that provides us with a lot of access to these new companies.
What would be the breakdown of your portfolio?
Start-ups form less than 10% of our total net wealth (we have some outside of super from pre SMSF days), the rest of our total net wealth would be around 60% equities, managed funds, etc and 30% cash.
Do you use external providers/advisers?
We use Wealth Enhancers, our own firm to manage everything for us, but we don’t advise ourselves, Rebecca Boles is our adviser.
We have a portion of equities that we directly invest in and we also use separately managed accounts in managing the other portion of our equity portfolio.
Was it more difficult to manage than you thought? Do you enjoy managing it?
For us, choosing investments is the easy/exciting part (that being said we are both professional and experienced financial advisers), but the administration of putting those investments in place, and managing the compliance and admin ongoing is not something I would ever want to do. That’s why we use our own firm Wealth Enhancers and our partners (currently Superfund Wholesale) as we just don’t have time to do all of that.
Are you happy with the performance of the fund? Can you provide any numbers?
The start-up investments won’t really be worth anything until the companies are listed or sold. But our equity portfolio has done well and has delivered 7 to 10% average returns over the past three years.
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