By Alison Banney (Finder.com.au)
Superannuation
isn’t everyone’s cup of tea. Let’s be honest, it’s boring and complicated and
it’s something that young Australians won’t need for another 20, 30 or even 40
years. However, your superannuation is likely your largest asset, and while
there’s no need to know every word of your fund’s PDS, there are definitely a
few things you should know.
1.
Where your money is invested
Australians
are becoming more and more aware of the footprint they’re leaving on our earth.
We’re seeing more people use reusable coffee cups, hearing more of our friends
and colleagues commit to eating less meat and seeing more people bring their
own shopping bags to the grocery store. But what about your super?
Your
superannuation is likely to be the largest investment portfolio you’ll ever
have and you could be supporting tobacco companies, ammunition manufacturing
or coal-seam gas extraction without even knowing it. You should be able to find
the details of where your money is going on your super fund’s website, although
you may need to do some digging. If you don’t like what you find, don’t
hesitate to switch to a fund that aligns with your values.
2.
Your insurance cover
If
you’re young, healthy and fit you might not consider life insurance as
something you need. But believe it or not, you’re almost certainly paying for
it through your superannuation. Most super funds will provide you with
automatic Death and Total and Permanent Disablement (TPD) cover when you open a
policy, and some will also include automatic Income Protection insurance.
These
insurance policies are almost always opt-out rather than opt-in, meaning that
unless you specifically opt-out of your policy you’ll be paying fees for this
cover, whether you want it or not. Have a look at your latest super statement
or read your fund’s PDS online to see what insurance you’re paying for, and
decide whether it’s right for you.
3.
What fees you’re paying
While
you’re poking around your latest statement, you should also take a look at how
much you’re forking out in fees. You might already know what admin fees you’re
paying, but what about the rest? There are also investment fees and a fee for
indirect costs (known as the Indirect Cost Ratio) charged to most accounts, and
these can vary greatly between funds.
The
difference in fees between funds might not seem like a big deal when you’re
young, but it can have a huge impact on your superannuation balance by the time
you’re ready to retire.
4.
How your fund has been performing
Because
of the compulsory nature of superannuation, many people think that all super
funds perform equally, but this is simply not the case. It’s important to think
of your superannuation as one large investment portfolio. It doesn’t guarantee positive
returns, it relies on the skills and knowledge of the fund manager to invest in
assets that will provide positive returns. And some are better at this than
others.
When
applied to a balance of $100,000, the performance becomes quite serious. You
should be able to find your fund’s portfolio performance figures on its
website.
Superannuation
is incredibly complex, and it can be overwhelming to try and understand every
tiny detail of your fund. Instead, use these four areas as a starting point
from where you can learn more about your super.
Please
also check out our blog on new rules for super contribution as voluntary
contributions may now be tax deductible.
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Important Information
The information on this website is general advice only. This means it does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.
A Product Disclosure Statement for Raiz Invest and/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.
The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.
Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.
Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.
