I love investing in ASX shares because of the wealth-building that that allows me to do. But, not all of my investing is done through superannuation, in-fact a large chunk of my wealth is invested outside of superannuation.
Don't get me wrong, I think superannuation is a wonderful tool for investors to benefit from the advantages it provides.
The tax rate of investment returns in superannuation is lower than what it is outside of superannuation for full-time working Australians, that's great. I also like how employees are provided with mandatory contributions towards their retirement, ensuring many Aussies can enter their golden years with a sizeable nest egg.
Additionally, there are different strategies that allow Aussies to make non-mandatory contributions to maximise their retirement savings.
I'm steadily building my superannuation balance over the years and I'm looking forward to the time that I can access that money. But, there are a few reasons why I'm choosing to regularly invest into ASX shares outside of superannuation.
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I can access my ASX shares today
It's understandable why there are age limits on when people can access their retirement money. It's meant to fund retirement, not to be spent beforehand.
However, that also means that any money that gets sent into superannuation is essentially locked away for a long time. As someone in their mid-30s, I have to wait decades until I'm allowed to start receiving an income from it. The age of access could be even higher than it is today by the time I reach that age in three decades.
I do want to have a good superannuation balance when I reach my 70s – but I also want to access some of my dividends earlier than that. Additionally, what if I want to retire earlier than my late 60s or 70s?
I like that investing in ASX shares outside of superannuation means I have flexibility with my investment money.
For me, it's useful to have some investment money for the medium-term and some for the ultra-long-term, even if it's not the most tax-efficient way of growing my wealth
More choice
One of the best things about many of the large superannuation funds is that they make it very easy to just invest in broad buckets of 'international shares', 'Australian shares' and so on. Not only is that an effective investment strategy, but it keeps costs low.
However, as someone who loves investing in specific ASX shares shares, I like being able to choose which investments on the ASX I want to buy.
Australians can invest in ASX shares with superannuation, but that usually means paying for the privilege, which isn't ideal.
Investing outside of superannuation means I can choose to invest in virtually anything and I don't need to pay higher fees. I like being able to buy and own Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares in my own name, for example, receive the dividends into my bank account and be a long-term shareholder.
In the long run, I like the balance I'm achieving between optimising wealth-building and ensuring I can access my non-superannuation finances for earlier enjoyment than at retirement age.
