Why Gen X & Y should be looking at their superannuation now
According to a recent survey, a frightening number of young Australian’s are in the dark when it comes to their superannuation and only half are able to correctly identify what superannuation actually is.
The poll of 1,007 people, aged 18 to 30, showed that 70% rarely or never think about their super.
It’s alarming the lengths that people will go to delay looking at their super especially when you consider that acting early can result in a much bigger pot of money. According to the poll, 16% of people would rather give up TV for a week, 13% would prefer to visit the dentist and 7% would rather have their in-laws stay over.
With 9.5% of your salary being contributed into your super, it’s extremely important that you understand how super works and what you can do to maximise it. Knowledge is a powerful ally in the world of finance and while retirement may seem like a life-time away, a small change now can make a huge different to your lifestyle. There are short courses available, that explain the difference between industry and retail funds and how to set up a diversified portfolio.
Choosing (and changing) your Superannuation Fund
You don’t have to stay with the same fund throughout your life. It’s your money, and if you’re not happy with your returns, you can (and should) change funds.
When it comes time to choosing the right fund for you, make sure you consider the medium and long-term performance figures, not just their short-term gains or losses.
The performance is often expressed as a percentage, for example, Successful Ways tailored portfolio delivered returns of 15.04% over 5 years (ending 30 June 2016). If you compare that to some of the bigger industry funds, you’ll realise that choices can have a big impact on the final lump sum that you receive when you retire, due to the impact of compound interest.
How can a financial adviser help me?
With everything that’s going on in financial markets, it’s only natural to be looking for help to make sense of it all. Like all of us you want to know what the changing markets mean for you, your family, your savings and your future. That’s why it’s a good idea to speak to a qualified financial adviser.
The great debate in the media now is around fees. Don’t be fooled into thinking that higher fees and commissions to financial advisors mean less money in your account. Of course, the lower the fees the more money in the short term but good superannuation advice and investing in the right funds can be an invaluable investment in the long run.
The below report shows the returns and fee structure with a super balance of $100,000 for someone earning $80,000 per year. As you can see, the Retail fund managed by a financial advisor has the highest balance after 5 years.
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