Keep it simple, super
Personal superannuation, often referred to as 'super', is a tax effective way of saving money while you're working so you can benefit from a regular income in retirement. For most of us, we'll spend more than 20 years in retirement. Taking control of your super now while you're working could mean a more enjoyable and rewarding retirement.
For most Australians, superannuation will represent one of their most valuable investments after their own home. Superannuation is your nest egg for the future, and whilst for some, retirement may seem a long time away, there are some simple steps you can take to gain and maintain control of your super to ensure you generate the most benefit for your golden years.
Many of us will work for different employers over the course of our working life that could result in having separate superannuation accounts.
Having multiple accounts could mean paying more in account fees than necessary, and those extra fees could have been put to savings in the one fund.
So, firstly identify all your superannuation accounts and then transfer or consolidate them into a single fund. You'll be saving on fees, your retirement monies will be higher and you'll easily be able to keep track of your super balance.
Before consolidating, speak to your financial adviser.
The investment options you choose for your super could affect your retirement savings. More than half of Australians have their super in a default option where the underlying investment strategy may not be in line with personal goals. Choosing where to invest your money is a difficult decision and will depend on many factors such as your overall investment objectives, risk profile and the amount of time you have to invest.
Some of the main considerations you may need to take into account include:
Saving for retirement is a long-term goal. In your younger working years, your super contributions will grow significantly over time, and are the foundation for your retirement income. It usually makes sense in the younger years to focus on higher growth assets like shares, which typically have healthy long-term returns.
Moving closer to retirement, where the length of time for super contributions is now less, you may consider moving to more balanced investment options, where you have the opportunity to invest in lower risk assets.
As you approach or are in retirement, accessing your investment as an income stream, generating a little growth and capital preservation become increasingly important.
No investment is completely risk free, but some carry more risk than others. In general, the greater the amount of risk an investor is willing to take, the greater the potential return.
Everyone has a different appetite for risk. Some of us may be comfortable investing in high-risk assets such as shares whilst others may prefer investing in low-risk assets such as term deposits.
Before determining your risk appetite, it's important to understand the risk return trade off. Put simply, the more risk you are willing to take, the higher your potential rewards may be. However, higher returns come with higher risk that the value of your investment may fall.
It's important that you understand your own risk appetite and that your super is invested in a way that suits your comfort level of risk whilst still helping you achieve personal goals.
Exposing your super investment to a broad mix of assets that are right for you helps you reduce risk across your portfolio while still enjoying strong long term returns. Selecting the right super strategy for you is important. Speaking to your financial adviser will help you work through the risk level you're willing to take, and the right mix of investments to help you reach your lifestyle and financial goals in retirement. A Fiducian Financial Adviser has the expertise to assist you in this process.
Super can be a tax effective way of saving money for your retirement, and making extra contributions to your super can boost your retirement balance. Relying on compulsory employer contributions alone may not be sufficient to meet your personal retirement needs.
There are a number of additional ways of contributing to super (pre and post tax) that could be the key to accumulating a higher retirement nest egg.
For more information, consult with your financial adviser.
The Fiducian Superannuation Service is a streamlined superannuation master trust designed to help you build and manage your wealth before and after retirement. Its flexible structure allows you to implement the investment strategies that suit your risk requirements, investment time frame and growth and income needs
Its many features and benefits include:
With a broad and varied investment menu, it suits all types of investors from novice to highly experienced, and from people early in their working lives right through to those transitioning into or already in retirement.
