If you have had the same Super Fund since you started working, have multiple Super accounts or have never paid too much attention to your Super Fund; chances are you could be missing out on tens, if not hundreds of thousands of dollars.
In the first of our “Super Challenge” series we ask you to consider just FIVE simple questions to find out if your Super Fund is right for you.
Like many young professionals, your Superannuation is unlikely to be at the top of your priority list, but with a little bit of effort now, you stand to reap enormous dividends in the future. It’s time to take the Wealth Fundamentals “Super Challenge” and find out if your Super Fund is right for you.
1. Is it just about the performance of your fund?
When comparing Super Funds, many people focus on the investment performance of their Super Fund, Yes, it’s important that your super continues to grow, however looking at the performance of your Super fund over the last 5-10 years may not provide a true indication of future performance. There are many other factors that should be considered such as the investment choices available to you; whether the fees you pay are affordable and competitive with other funds, and if the Fund offers other benefits including good quality insurance cover.
We can help you identify Superannuation strategies which are appropriate for your individual needs. Superannuation has many complexities and seeking advice can help you understand the differences as well as the risks and the benefits of various Funds so you can make more informed decisions that considered more than just the Fund’s investment performance.
Please note: Past performance is not a reliable guide for future performance.
2. Do you really know what you get for the fees you are charged?
Different Superannuation Funds charge different fees, including administration, contribution, fees for the provision of financial advice, and sometimes ongoing management fees. While lower fees may sound like a compelling factor in choosing a Superannuation fund, it’s important to know what you are paying for and consider other factors in your decision making such as the timing of tax payments.
In a majority of low fee administration funds, the contributions tax is taken out within 7 days of the contribution being received. Whereas via a retail super wrap style account contributions tax is withdrawn as part of the tax return preparation for your fund.
So whilst reduced administration fees are important, timing of tax payments can also be a critical consideration.
There are pros and cons of choosing a fund for your circumstances and seeking professional advice can help you understand the benefits associated with different funds.
3. What type of investment options are available within your Super Fund?
It is important to know if your Super fund has a range of investment options across a range of asset classes including cash, property, Australian shares, International shares and bonds. From these you’ll need to know which investment option you have chosen - a Conservative Investment Option, a Balanced Investment Option, or a Growth Investment Option? Or are you currently using the Default Option? Knowing which investment strategy is appropriate for you and your stage of life can have a significant impact on the performance of your superannuation savings.
Seeking professional advice means your Superannuation portfolio can be tailored to your needs. We can help you better understand the benefits or risks associated with different investment options and take into account what’s important to you, which might include investing in ethically responsible investments.
4. What type of insurance options are available in your Super Fund?
Not all funds offer the same insurance protection for Life Insurance, Income Protection Insurance and Total and Permanent Disability Insurance. Many Superannuation Funds offer reasonably priced group insurance policies which may only offer a basic level of cover, have clauses which restrict cover or exclude cover for some pre-existing medical conditions.
While holding personal insurance through Superannuation can be a tax effective option, a tailored and underwritten insurance policy may be better for your specific circumstances and stage in life. Some funds may restrict what type of policy you are able to hold within your Super. It’s important to understand what will happen if you lose your insurance cover or if you face waiting periods for your insurances should you move Super Funds. You may not have the cover you think you do and this could leave your financially exposed.
5. What other benefits does your Super Fund offer?
There are many other factors that contribute to whether or not a Super Fund is right for you such as; the ease of using online services; your level of involvement in investment strategies; the ability to make additional contributions; the provision of education or financial planning advice within your fund; and other services which can generally enhance the Superannuation service you are offered.
The point is this – it pays to investigate your Superannuation choices, rather than just opt for your employer’s default fund. It’s your money after all, so when considering Superannuation and retirement, the earlier you start, the more you stand to gain. Indeed, we are able to provide our younger clients – those who may be embarking on a professional career or raising families, many options to get you started on your wealth creation journey.
If you would like help to understand if your Super fund is right for you, or to take control of your Super please contact us on (07) 3720 1299 or email admin@wealthfundamentals.com.au
Matthew Lane and Chris Lane are Authorised Representatives with Lane Moses Pty Ltd. Lane Moses Pty Ltd, ABN 56 092 186 117 trading as Wealth Fundamentals and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only - unless otherwise stated. Wealth Fundamentals strongly suggests that you should not act on it without first obtaining professional advice specific to your circumstances.
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