Understanding Superannuation, It IS real money!
Superannuation is very misunderstood and often neglected part of our wealth, people don’t pay much attention to their Superannuation until they approach retirement and don’t view it as part of their overall assets.
A recent study indicated that 2/3’s of Australian’s could not accurately state how much money they had in super, about half did not know the name of all the funds in which they had super invested and more than half also had money invested in more than 1 fund without a strategic reason and only about 10% could give an accurate description of what underlying assets in which they were invested
I believe there are 2 main reasons for this neglect, firstly as we cannot access these funds, so it becomes a low priority and secondly many don’t understand super and place the whole concept in the too hard basket.
The first misconception with Super is that it is a type of investment, I often here people make comments like “I don’t trust super and don’t want to lose my money” or” you can make more money with property than Super”. Superannuation is not an investment it is a Tax Structure, in fact within Superannuation you can invest in direct property, shares, managed funds, term deposits and even artworks.
The government would like people to save for their retirement and as such have created a tax structure that has mandated savings (9% of our salary) that is treated differently to all other investments. The money invested in these funds is taxed concessionally upon investing the funds, we only pay 15% on those monies invested, instead of our marginal tax rate which can be as high as 46.5%, the return on investment is also only taxed at 15% for income and 10% for capital gains. Again lower than most of our marginal tax rates.
People that are worried about losing their money in super are most likely invested too aggressively, this is all the more reason to address your super and have a financial advisor sit down and establish an investment strategy suitable to you, there are options well suited to the ultraconservative right through to the aggressive risk taking investors, it is important that you are invested appropriately.
Eventually your Superannuation becomes your income replacement When you no longer work for income, you’ll need to replace this income using your assets. It is important to realise this and start to work towards building enough assets to generate income in retirement. We recommend that you start setting some goals and work towards achieving them, constantly ensuring you are on track.
Superannuation is real money, and it is your money that will be extremely important for you later in life, it is definitely in your best interests to start treating your superannuation like all other assets, which means locating all your funds and keep track of them, investing in line with your goals, making sure you are paying reasonable fees and having a clear goal of the end result.
If you need assistance in getting your superannuation under control please feel free to contact us at http://futurefinancialservices.com.au or speak with your financial advisor.