Superannuation funds can seem super complex.
But by focusing on just two things – finding a fund with low fees and choosing the right investment options – can hold the key to earning tens of thousands of dollars more for your retirement.
And in light of the news that people saving into poorly performing superannuation funds could be up to $530,000 worse off than those who invest in some of the better funds, now is the time to make sure you’re setting your future self up for superannuation success.
Spend some time managing your superannuation and understanding how to make your money work for you.
Finding the right fund
If you’ve ever dreamed of retiring early, it’s not too late to make your dream a reality.
The best place to start is by scrutinising your current superannuation fund (or funds if you’ve had multiple employers) and make sure that you don’t have super spread out over a few accounts. If you do, you can get a form called a ‘portability form’ from the Australian Tax Office that will help you roll over your super into a single fund.
The next step to set up your sole superannuation fund is to lock in an account that has low fees. Unfortunately, all super accounts charge fees and the more you’re charged, the less cash you’ll have to splash when you retire.
Some people choose superannuation funds with higher fees because of the impression that it may achieve a higher return on investments. Keep in mind that higher fees won’t guarantee a higher return, so it’s a wise move to switch to a fund with low fees.
Even something minor like a 0.5% difference in account fees may sound insignificant, but think about the impact that 0.5% will make in decades to come – it could literally starve your eventual total by tens of thousands of dollars.
Check out this Government calculator to do the math and see just how much damage fees can cause on your overall superannuation total.
Make a wise investment
Seeing as superannuation is compulsory in Australia, you might look to view your fund as enforced savings.
When it comes to choosing your superannuation strategy, you should make sure that your fund provides options that suit your needs.
Superannuation is a trust that holds your investments in certain assets. Many funds will allow their customers to decide how their balance is invested, or if no choice is made, they will choose a default investment option for you.
Working out how you’re going to divide your portfolio into different asset classes (such as shares, bonds, and property) is known as asset allocation. If done correctly, you can make your money earn you an extra cash injection that can really help when it comes time to withdraw from your super fund.
If you’re more than 10 years away from retirement, you might consider an investment strategy that will allow your super fund to invest your money and grow your nest egg over your working life.
For example, a conservative option won’t have a high risk, but the investment returns it provides over the long term may also be on the lower end of the scale. A higher growth option will have a greater risk and may experience more volatile returns over the short term, however, it will also usually achieve bigger gains if you are a long-term investor.
Finding a superannuation account with low fees and the right options for asset allocation can make all the difference and if done strategically, can help you retire by your dream deadline.
There’s no ‘one size fits all’ approach, which is why it’s wise to speak to an expert who can do the hard work of research for you.
The team at Inovayt Wealth, are specialists in helping people manage and grow their superannuation and can assist in implementing an investment strategy tailored to your financial circumstances to help you build your wealth.
We’ve helped hundreds of people just like you set themselves up for superannuation success. Book a free meeting with us today to see how it’s possible.