Excuse my ignorance but looking for advice on growing my super.
My super is looking really bad. I don't understand why my interest earned is so low. So fees being charged are more then interest earned. Over the past 2 years contributions are about 4000 but there is only 2700 in my account due to the low return and high fees. Does it get better the more money that's in there? Or is that actually bad? Who can I talk to that can help me make sure I'm getting the best investment? A financial broker or someone else?
Super
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4 Replies
If it's an investment account it will look pretty poorly right now as the stock market is very low due to covid. Best not to look at it! The best way to grow it is by working and adding extra into it.
What fund are you with? I haven’t worked in nearly 20 years and my fund has tripled without me putting anything into it, and I also have life insurance premiums come out of it. I am with Hostplus and they have some of the lowest fees on the market. I am not a fan of super (have found other ways to set myself for retirement) and have even made a withdrawal under Covid reforms and will do so again in coming days.
Everyone's super looks poor atm. It'll rise as the market does. Mine has dropped 50k. As long as your not retiring in the next few years it's not a problem. It'll come up when the market eventually rises.
You should investigate both your current fund & other funds for fees and growth. There are usually different investment options for different risk levels. (More risk, more return, but higher risk of losing money.)
Investigate voluntary contributions and government incentives for that. You might get tax breaks up to a certain amount, depending on your income.
As it grows, your super starts to compound & the more you have, the more it compounds, and grows.
If you see an advisor, specify you want to include industry funds in the comparison. They aren't necessarily the best choice, but can be for your situation.
Good luck!
I've worked extensively with financial planners/advisors in my careert and can give you a few things to investigate:
- yes your balance is very low, and usually you see bigger returns with more money (compounding interest), but your fund may also be overly expensive in fees, if possible look at rolling into an industry fund, examples are HostPlus or Australian Super. Their fees are very low compared to other funds;
- if your funds are invested in a lower growth option you won't be getting a very high return for your investment as it will be mostly cash and fixed interest - with interest rates so low it won't earn much - whereas higher growth options are invested in shares funds, both domestic and international, property and infrastructure funds, with a little bit of cash and fixed interest for balance. With a low growth option your fund won't suffer massive dips in uncertain times such as this, but you also forgo the higher returns that shares and property can earn. While it is all dependent on your comfort around risk taking in investments, as a general rule if you have many years left until retirement, most people can safely invest in higher growth funds. You may see one year in every few (5-7) produce negative returns, but the growth years will make up for it;
- if you have been automatically opted into insurance, the premiums will be deducted from your balance and be eating into it, especially if your returns are low. Probably not worth having with a low balance UNLESS you have an underlying medical condition or health issues that may make getting any type of insurance difficult later. If you're looking to keep it, find out how much the payout is and compare with the premiums to make sure it's worth it.
It probably isn't worth seeing a planner or advisor at this point. Check the MoneySmart website for more info. Look to completing a risk profile - a good, simple online one is
https://secure.bt.com.au/risk-apps/risk-profiler.html
I would also recommend The Barefoot Investor's book section on super as it's very easy to understand and gives a lot of good info, even if you don't choose to follow his advice to gje letter.
Good luck, feel free to ask more questions!