Where is Your Money?
It’s important you understand how your super is performing. You should know how much money you actually have, the type of fund you’re in and any fees that you’re paying or exit penalties that will apply. There are two key ways to find information about your fund.
Each year around July you’ll receive an annual statement from your fund – it’s a good idea to keep these. Check each one and make sure that the correct contributions have been paid into your fund over the year (including your employer contributions). Also make sure that you’ve supplied your tax file number to your fund manager otherwise your super may be taxed at a higher rate.
The fund website
Most super funds have online sections for their members. It’s an easy way to change your details if you move, check out how much money you have, see exactly how your money is invested (e.g. shares vs cash) and change your fund choice if necessary.
Five things to consider
1) Do you have more than one fund?
If you’re like most people, over the years you’ll probably have worked a number of jobs without keeping track of your super. It’s easier to keep track of if it’s held in one or two funds and this can also reduce the fees that you’re paying. If you’d like to roll your ‘old’ super funds over into your current fund you can do this by jumping onto your fund’s website and downloading a super rollover form.
2) What type of fund are you in?
Make sure that the type of fund you’re investing in is the right one for you. Being in the wrong fund can cost you 30-40% over a lifetime according to SuperRatings. That’s the difference between retiring on $600,000 or $900,000!
Most superannuation companies offer a number of funds. Experts often suggest that young people should be in ‘growth’ funds (which are usually heavily invested in Australian and international shares) as they have the time to ride out sharemarket fluctuations. For example, growth funds have historically recorded higher returns than balanced funds over the long term. It’s important to note that a balanced fund is usually the default fund that a superannuation fund manager will place you in if you haven’t specified a fund type yourself.
The Australian Securities and Investments Commission’s consumer website MoneySmart has a good section on matching your goals to your risk tolerance and investment type.
3) Are you paying too much in fees?
Most superannuation funds will charge you annual fees and also an exit fee. According to John Bresnahan, if you’re paying more than 1 to 1.5% you’re paying too much. Although 2% may not seem like much now it adds up to a massive amount over time.
This calculator will project your income for retirement, allow you to compare different funds and show you the impact on your final payout of fees.
4) Does your fund have a good track record?
Check to see if your fund has a history of performing well over the medium to long term and compare it to similar fund types offered by different superannuation managers.
MoneySmart will help you to choose and compare super funds.
5) Lost your super?
There are millions of dollars floating around in the deep, dark depths of Australian financial institutions. Do a quick online check to see if any of it is yours!
The Australian Taxation Office is a good first port of call to locate lost super funds. You’ll need to provide your name, date of birth and tax file number to conduct your super search.
Find a financial adviser
Check out the Australian Securities and Investments Commission’s website MoneySmart – it has loads of great information about obtaining personal financial advice and finding a qualified financial adviser. Experts often suggest you find an adviser who charges by the hour instead of receiving a commission.
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