With so many Superannuation funds to choose from, it can be hard to know which one suits you and your needs.
And it’s no small decision. Choosing the right or wrong fund will have a tangible impact on your returns and how much money you’ll have available in retirement.
So how do you make the right choice? The ball is in your court, and it’s important to get the right advice. But here are some key considerations.
Performance is key
No one has a crystal ball, so super returns and fund performance can never be guaranteed, past performance can give you some indication. Look at the last five years, and compare similar super funds to get the most relevant comparisons.
There are also various tools available online, including this one from the ATO, to help you assess the options.
Some super funds let you choose from a range of investment approaches, including growth, balanced and conservative options.
The growth approach is optimised for higher returns, but at a high risk. This includes investing in property or shares.
Balanced means a broad mix of investments with a focus on fixed-interest and cash-based investments.
A conservative approach aims to have minimal risk of money loss, but also generating the lowest potential returns of the three.
It is important to weigh up the level of risk you’re comfortable with, with the full knowledge of the expected upside and downside.
It’s a smart move to understand what, and the level, of insurance included with the super funds you’re considering.
Most funds offer life insurance, total and permanent disability cover and income protection cover. When comparing the insurance for multiple super funds look for premium rates, the amount of cover and any exclusions that might affect you.
One of the benefits of having insurance through your super fund and not a separate insurer is that normally it is cheaper than external insurance and doesn’t require out of pocket payments – instead, it’s pulled from the funds available in your super.
The downside however is that the insurance may not cover your specific life situation and needs. So again, make sure you get professional advice.
Every super fund comes with fees, so comparing these expenses with other factors such as risk, investment returns, services and insurance will important to determine the value and benefits of the funds you’re considering.
A general rule of thumb is that the lower the fees, the better. Comparing the fees deducted, whether they be a fixed dollar amount or percentage of your balance, against the returns, can give a solid indication if the percentage of fee is too high.
Super funds sometimes also offer a range of services that are included with the fees. It’s important to again weigh up what’s on offer, decide whether you’ll actually use those services, and then decide whether to factor it in to your decision making process.
Get the right super strategy, and the right fund, with expert advice from Nitschke Nancarrow. Get in touch to chat about your needs.
The information contained on this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on Nitschke Nancarrow’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
Nitschke Nancarrow specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.