Here are three quick tips you can use to tidy your super in just 10 minutes this weekend!
Superannuation is probably the most overlooked asset in a typical Aussie’s net worth. Yet I think it’s vital for all Australian’s retirement prospects that we ensure our super is in order. Einstein didn’t call compound interest the ‘eighth wonder of the world’ for nothing, and that’s exactly what superannuation is designed to harness!
Super tip 1 – consolidate, consolidate, consolidate
I think everyone agrees that paying fees to your super fund manager isn’t fun. And yet there is far too many people paying at least double (often more) the fees than they otherwise should be. That’s the consequence of having two or more super funds. You don’t get a ‘buy one, get one free’ offer.
Unless you have a really good reason, I don’t think anyone should have more than one super fee or more than one fund taking their pound of flesh from your retirement. It’s won’t take more than a few minutes to consolidate your super, so make this weekend the time to do it if you haven’t already! It’s worth checking – even if you don’t think you have more than one, you might be surprised!
Tip 2 – invest in an appropriate asset class
Most Aussies don’t give too much thought to how their super is invested on their behalf. In fact, superannuation giant AustralianSuper reports that over 90% of their customers opt for the ‘balanced’ option. But if you’re under 40 or have a higher risk tolerance, you might be missing out on some long-term gains by not selecting a more aggressive, share-dominated portfolio.
Balanced funds are designed to balance both risk and returns using ‘safer’, low-risk investments like cash and bonds. But risk management might not be really necessary if you’re decades out from retirement. And history shows that shares like those in the S&P/ASX 200 Index (ASX: XJO) are the best path to wealth creation
So have a think about your own risk tolerance and when you plan on retiring. You might come to the conclusion that you’re better off investing in a higher-growth option.
Tip 3 – focus on fees
There are only 3 things that will affect the amount of money you will have when you eventually decide to retire: the cash you put in, the returns you can get and the fees you pay. Of course, most people earn as much money as they can, so the first point is moot (although, you can also consider salary sacrificing). For the second point, see tip 2.
But fees are something we can always control. The range of fees that various super funds charge is staggering. Some funds even charge their clients over 3% per annum. There are easy ways to compare your super fund’s fees online, so make sure you’re not overpaying for your retirement. These costs can literally drain tens of thousands of dollars or more from your retirement over a working life, so staying on top of them is something that you want to consider if you’re serious about retiring with as much money as possible.
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