Self-managed superannuation funds investing record amounts in cash could hinder their ability to grow or even protect their wealth, according to Market Vectors Australia.
Managing director Arian Neiron said the approach could constrain wealth growth as returns are low and inflation could rise.
"Annual inflation was 2.9 per cent so the real returns on cash investments are close to zero, add in tax and you are in negative territory," Neiron said.
"The Reserve Bank has this week indicated that it is not likely to raise interest rates anytime soon and banks have lowered rates on term deposits. SMSF investors should consider their options to protect against rising inflation."
Data from the Australian Taxation Office (ATO) released this week showed SMSF cash investments rose to $156.2 billion during the March quarter, up from $153.7 billion in the December 2013 quarter.
The cash holdings make up 28 per cent of total SMSF assets, which hit $558.6 billion in the March quarter, up from $547.6 billion in December 2013.
SMSFs invested $179.5 billion in listed shares, up from $174.8 billion in the December 2013 quarter.
SMSFs invested $20.4 billion in listed trusts (including exchange trade funds), up from $19.9 billion in the December quarter.
