“SMSFs should consider diversifying their investments with ETFs in 2014 to build their wealth over time, rather than seeing the value of their cash eroded by tax and inflation,” Mr Neiron said.

“With interest rates falling to their lowest in years, and Australia’s inflation rate rising in recent times, the real returns on cash are falling. Australia’s inflation rate surprised the market in the final quarter of 2013, climbing to 2.7 per cent, up from 2.2 per cent in the December 2012 quarter.

The sharp fall in the Australian dollar is expected to keep upward pressure on inflation through 2014.

“As well as term deposit investments, SMSFs have a wide range of listed investment options, such as ETFs, which can be used as a long-term growth strategy or to gain short- to medium-term equity market exposure while deciding where to put funds longer term.”