General Advice Warning

This article provides general information only and does not constitute personal financial advice. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information in this article, you should consider whether it is appropriate for you and seek advice from a licensed financial adviser if necessary.

The chief executive of Global X, a major exchange-traded fund (ETF) provider, has raised concerns that Australians are building wealth through compulsory superannuation and property investment without developing the fundamental investing knowledge needed to manage their financial futures effectively. While the Superannuation Guarantee system and the Australian property market have created wealth for millions, they may have inadvertently masked a critical gap in financial literacy across the population.

How Compulsory Super Masks the Knowledge Gap

Australia’s compulsory superannuation system, introduced in 1992, has been remarkably successful at building retirement wealth. Under the Superannuation Guarantee, employers must contribute 11.5% of ordinary time earnings to employees’ super accounts (rising to 12% by 1 July 2025). According to APRA, the superannuation system held over $3.5 trillion in assets as of mid-2026, making it one of the largest pension systems globally relative to GDP.

However, this automatic wealth accumulation comes with an unintended consequence: most Australians never need to learn the fundamentals of investing to build a retirement nest egg. Money flows into super accounts, is invested by professional fund managers, and compounds over decades without requiring the account holder to understand asset allocation, diversification, or risk management. As covered in foundational texts such as Principles of Finance, these concepts are essential for making informed investment decisions, yet many Australians reach retirement age without grasping them.

The result is a population that has benefited enormously from compulsory super but often lacks the knowledge to make informed decisions about voluntary contributions, fund selection, insurance within super, or retirement drawdown strategies. Many Australians are unaware of the difference between industry funds and retail funds, the impact of fees on long-term returns, or how investment options within their super fund align with their risk tolerance and time horizon.

The Property Obsession Factor

Compounding the super-induced knowledge gap is Australia’s cultural fixation on residential property investment. For decades, property has been the default investment choice for Australians building wealth outside superannuation. Negative gearing (where investment property expenses exceed rental income, creating a tax-deductible loss against other income), the 50% capital gains tax discount for assets held longer than 12 months, and schemes like the First Home Super Saver Scheme (FHSS) have made property investment tax-advantaged and culturally normalised.

This property focus means many Australians have built substantial wealth through a single asset class, often with limited understanding of broader investment principles. Property investing, while requiring knowledge of markets and finance, follows a relatively straightforward path: secure a mortgage, find a rental property, claim deductions, and hold for capital growth. This approach has worked for millions of Australians during decades of strong property price appreciation but has also meant many investors never learn about shares, bonds, ETFs, diversification across asset classes, or international investing.

The cultural assumption that property is the safest, most reliable investment has created a generation of investors with deep knowledge of one asset class but limited exposure to the broader investment landscape available through the ASX and international markets.

What Australians Don’t Know

The investing knowledge gap manifests in several key areas. According to ASIC’s MoneySmart research, many Australians struggle with concepts including:

Diversification and asset allocation: Understanding why holding only property (or only Australian shares) concentrates risk, and how spreading investments across different asset classes, sectors, and geographies reduces portfolio volatility.

Fees and their impact: Recognising how a 1% difference in annual fees can erode tens of thousands of dollars over a 30-year investment horizon, particularly within superannuation.

Risk and return relationships: Grasping that higher potential returns come with higher risk, and that risk tolerance should match investment time horizon.

Investment vehicles: Understanding the differences between ETFs, listed investment companies (LICs), managed funds, A-REITs, and individual shares, and when each might be appropriate.

Read also: How to Use Your 2026 Tax Refund to Boost Your Super or Investment Portfolio in Australia

Tax efficiency: Knowing how franking credits work on Australian shares, when the CGT discount applies, and how to minimise tax within an overall portfolio strategy.

The ASX provides extensive investor education resources, yet many Australians with significant wealth in super and property have never accessed them.

Why the Knowledge Gap Matters

This hidden knowledge gap creates several risks. Investors who retire with substantial super balances but limited investing knowledge may make poor decisions during the critical transition to retirement phase, potentially choosing inappropriate drawdown strategies or failing to rebalance their portfolios as their time horizon shortens.

Over-concentration in property leaves many Australian households vulnerable to localised market downturns, with insufficient diversification into shares (both domestic and international), bonds, or other asset classes. During periods when property values stagnate or decline, these households have no other growth assets to offset losses.

Additionally, investors who don’t understand fee structures may remain in high-fee super funds or investment products unnecessarily, paying thousands of dollars annually in excess fees that could otherwise compound as investment returns.

Building Investment Knowledge

Recognising the knowledge gap is the first step toward addressing it. Australians can access free, high-quality financial education through ASIC’s MoneySmart platform, which covers investing fundamentals, super choices, and retirement planning. The ASX also offers extensive investor education, including courses on shares, ETFs, and portfolio construction.

For those new to investing outside property and super, simple diversified ETFs tracking broad market indices (such as the ASX 200 or global equity indices) provide an accessible entry point. These products offer instant diversification at low cost and require less specialised knowledge than selecting individual shares.

Understanding super fund options, comparing fees and performance, and making informed choices about investment options within super are crucial skills that all working Australians should develop, regardless of their other investment experience.

For personalised guidance tailored to individual circumstances, consulting a licensed financial adviser can help bridge knowledge gaps and develop appropriate strategies aligned with specific goals, risk tolerance, and time horizons.

Moving Forward

The success of compulsory superannuation and the wealth created through Australian property investment should be celebrated, but these achievements should not obscure the need for broader financial literacy. As investment markets become more complex and Australians take greater responsibility for their retirement outcomes, building fundamental investing knowledge is no longer optional - it is essential for long-term financial security.

Rates, contribution caps, and tax rules mentioned in this article are current as of October 2026; verify current information at ato.gov.au and moneysmart.gov.au before making decisions.