I recently surveyed a group of financial advisers on their viewpoint about super and it was notable that there is a growing trend among people to pay little or no attention to their super fund. It’s kind of understandable with superannuation being such a long way from being available for most workers.
This month I thought it’d be of value to highlight the areas to look at so you review your current arrangements for super, after all with your employer currently paying 9.25% of your earnings into compulsory super for you, a little effort can make a big difference later. With that in mind I highlight the following points worth noting about your current super:
- Fees Review – Retail Funds mostly charge percentage based fees. The fee to manage a retail super fund can range from 0.25% up to over 2.00%, which normally comes straight out of your balance before any earnings are paid to you. On a balance of $150,000, that’s ranges from $375 to $3,000 a year calculated on a moving balance. Where you are in the upper realm of costs that I just mentioned, I suggest it is worth reviewing your options – feel free to call on us to review how doing this might make you up to $65,000 or more.
- Advice on your fund selection can save leg work – Many people are unaware of their investments in super and tend to just let it ride. Reviewing super with someone who can show you how some options might suit you and your objectives in super, may make a considerable difference in the long term.☺
- Make sure your super is being managed well – Benchmarking (comparing for similarities) your investment manager’s performance against their peers is important to you in direct correlation with how big your super balance gets. The bigger balance you have at risk, the more you have to lose/gain by benchmarking. Smart investors always keep manager risk to a minimum through smart selection of assets and strategies used by the managers. One way to keep your super investment manager honest is by keeping an eye on their competition. A good adviser is your biggest asset here in trying to do this, as they can provide you access to benchmarking your assets against their peers and ensure you know what your alternative options are and any consequences of change if you did want to make a move.
- You CAN control your super – The opportunity to self-manage super is a broadly used approach (ie. Self Managed Super Funds – SMSF), as I mentioned in a couple of prior articles (refer to our Blog: ‘Is your super teaching you a lesson’ & ‘The Super Cure’) this is worth a look.
- Changes to the superannuation legislation – Notably, I have yet to witness a retrospective change to super legislation in 14 years in the industry, which means while these great opportunities are here, such as using property investment in your fund, salary sacrifice and transition to retirement (for those over age 55 drawing a tax effective pension from your super), they should be looked at and where appropriate taken advantage of.
In summation, this year looks again like a year of opportunity to make more of your super. So grab your super statements and tidy up where you think you need to be doing better.
If you want help with any of this, please email me at email@example.com
Until next month Happy Investing!