Most super members don’t actively manage their super investments. But, as members open their annual statements, Industry Super Network Executive Manager, David Whiteley, offers six simple tips to help members take control of their super.
Remember super is a long term investment
For most members it is time in the market, not timing the market that will result in better retirement savings. Staying with a well considered choice of balanced fund often delivers the best results over the long term.
Rely on diversified assets
A diversified portfolio, such as a balanced fund, works best for the majority of super members rather than putting all their funds in one type of asset (i.e. cash or Australian shares). It generally delivers lower volatility, more consistent results and fewer years of negative returns.
Check you are in the right fund
The choice of super fund can make a massive difference to retirement. Research agency, SuperRatings, said recently “In just 5 years a consumer could be up to some 33% worse off than their next door neighbour, simply by being a member of the wrong fund.”1 Consider a fund’s long term performance, fees and if there are any commissions to financial planners.
Understand fees and commissions
If you pay an extra 1% each year in fees and commissions you could lose approximately 20% of your benefit over 30 years2. That could amount to tens of thousands of dollars in retirement. Check and see if you may be better off with an industry super fund that has lower fees and does not pay sales commissions.
Consolidate your super into one account
Multiple accounts mean multiple sets of fees and changes. If possible* gather all your super into one account, where it attracts one set of fees and is easier to track. If you need help contact your main fund.
*Potential loss of benefit and exit fees in some retail funds make consolidation cost prohibitive.
Consider ways to boost your super
Super offers great tax benefits. And compound interest has a magic all of its own. Albert Einstein once described compound interest as the greatest force in the universe. Compounding is a process whereby interest on earnings is applied to the original amount invested and progressively to the interest on earnings. Therefore salary sacrifice, regular voluntary contributions or lump sum payments may be worthwhile. Check the ASIC website www.fido.gov.au about the tax benefits of super and methods to boost your super.
1 Jeff Bresnahan, Managing Director, SuperRatings, July 2009
2 www.fido.gov.au
Disclaimer
Consider your own objectives, financial situation and needs before making a decision about superannuation because they are not taken into account in this information. You should consider the Product Disclosure Statement available from individual funds before making an investment decision.