Your Super, Your Choice! 🚀
When you start a new job, your employer will often sign you up to their "default" super fund. But you have the right to choose where your super goes. Making a good choice early can mean hundreds of thousands of dollars more in retirement.
Here are the four key areas you should compare when choosing a fund.
1. Investment Performance 📊
This is the big one. You want a fund that has a strong track record of growing your money. Don't just look at last year's performance, as that can be misleading. Look for consistent returns over 5, 7, and 10 years.
Most funds have a "default" or "balanced" investment option, which is where most people's money is. This is a good starting point for comparison. You can usually find performance information in a simple chart on the fund's website.
Action: Compare the 10-year average return of the balanced option for at least three different funds.
2. Fees and Costs 💰
Fees eat into your investment returns, so lower is generally better. Every dollar you pay in fees is a dollar that isn't compounding for your future.
Look for two main types of fees:
- Admin Fees: A fixed fee (e.g., $1.50 per week) and/or a percentage of your balance.
- Investment Fees: The cost of managing the investments.
You can find these in the fund's Product Disclosure Statement (PDS). Look for the "Fees and Costs Summary" to see a clear breakdown. A competitive fund will typically have total annual fees under 1%.
Action: Find the total annual fee for a $50,000 balance in the funds you're comparing.
3. Insurance Cover 🛡️
Most super funds automatically provide you with insurance cover, including:
- Life Insurance (or Death Cover): Pays a lump sum to your beneficiaries if you pass away.
- Total and Permanent Disablement (TPD): Pays a lump sum if you become seriously disabled and can't work again.
- Income Protection: Pays you a monthly income if you're temporarily unable to work due to illness or injury.
Check that the default cover is suitable for your needs and that the premiums (the cost) are reasonable. The insurance offered can vary wildly between funds.
Action: Check the level of default TPD cover and the annual cost. Is it enough for your situation?
4. Investment Options pilihan
While you might start in the default "Balanced" option, it's good to have choices for the future. Does the fund offer different investment mixes? For example:
- High Growth: More shares, higher risk, but potentially higher returns. Good for younger people.
- Conservative: More cash and bonds, lower risk, and lower expected returns.
- Ethical/Sustainable: Invests only in companies that meet certain environmental, social, and governance (ESG) criteria.
Having these options gives you the flexibility to adjust your strategy as you get older or if your values change.
Action: Check if the fund offers at least a High Growth and a Socially Responsible option.