Take Charge of your Super & Receive Big Dividends Later
According to statistics cited by the Association of Superannuation Funds of Australia, younger Australians under the age of 30 often have less money in their bank accounts than they do in their retirement savings accounts. Despite this, forty percent of people who were polled have no idea what their super balance is. Another 16 percent of respondents stated that they simply had a general idea.
When you're young and living life to the fullest, retirement can seem like a long way off in the distance. At this stage in the game, planning for it now can practically be considered futile. But are you aware that right now is the optimal time to take responsibility for your contributions to your super fund? If you take these steps now, you will be able to give yourself and your family the necessary financial freedom in the future, which will give you access to a wider range of possibilities.
Get in touch with our SMSF specialist team headquartered in Melbourne if you have questions or concerns about regaining control of your retirement savings.
This will make it possible for you to accomplish the goals you've always set for yourself, such as going on a trip or paying off all of your debts. Or perhaps you'd like the flexibility to retire earlier than you previously believed was attainable. Or to start that small business you’ve always thought about?
Modifications that you make today to your retirement contributions, no matter how minor, will have a significant impact on your nest egg in the future. Your extra payments will generate more money in the years to come as a result of compound interest if you are willing to make a modest additional financial sacrifice right now. It's possible that you'll be adding more than 30 percent to your next fund for retirement.
You need to stay on top of the ways in which your existing super fund can benefit you rather than allowing it to do what it wants to do. Do you, for instance, have any idea how much money is now in the fund or where it is being invested on your behalf by someone else?
No matter what age you are, it is in your best interest to stay on top of your retirement savings. Getting into the habit of doing so at a young age confers additional benefits and increases the likelihood that you will make the most of the money you have set aside. Consider your retirement account to be similar to a trust fund, and begin calculating as soon as possible how it can benefit you. When it comes time for you to retire, this might make a huge difference.
Starting early
When you retire, you will thank yourself for the careful thought you put into your super contributions and the time you took to select your own personalized fund. For instance, by choosing the appropriate fund—one that takes into account your tastes and way of life—you will be able to set aside additional money right now, which will, over the course of time, grow within your fund. For younger people, setting up as little as an additional $50 per month could mean avoiding the need to find $1,000 per month to make up for lost ground in the future.
It’s not just about fees
When you worked for a company in the past, your employer was responsible for selecting your superannuation fund. This left you with little input into the type of fund that would be most appropriate for your circumstances. Although this is still the case for some businesses, such as those in which retirement plans are chosen as part of an industrial award or an enterprise bargaining agreement, the majority of situations now let the employee make this decision on their own. Confirm with your company whether or not you have access to options like this one. In that case, you should do some comparison shopping to identify the investment vehicle that meets your requirements the best.
A lot of individuals choose to invest in larger funds because they charge lower fees, but they're missing out on some additional benefits that smaller funds might offer. Although having low fees is a crucial consideration, it is equally necessary to investigate the functionality of a fund in addition to looking at its fees.
Check out our Melbourne SMSF Guide.
Set aside some time to browse through the websites of all of the fund companies and think about how their funds have performed over the long run. Think over the benefits of the insurance and ask yourself if you are okay with the potential downsides. Consider the potential risks and returns of each fund, as well as how well it meets your evolving requirements and whether or not it seems to be in line with the long-term lifestyle objectives you have set for yourself.
Altering your retirement savings plan at some point in the future
Always make sure you are monitoring the progress of your fund. Before making any choice to switch funds, the Australian Securities and Investments Commission suggests looking at the performance of a fund in contrast with that of others over a period of five years. This is in addition to just evaluating the returns over a shorter period of time.
Nevertheless, the flexibility with which you can withdraw your membership should always be a consideration when deciding whether or not to sign up for something in the first place. Does the fund charge exorbitant exit fees when investors want to get out? How will leave your employment to affect the payments that have been made on your behalf as well as benefits such as connected life and health insurance?
Treat your super as a trust fund
It is not suggested that you manage your own superannuation until you have experience with finances and investments, but having an understanding of how your fund operates and how to use it to your benefit is a significant step forward.
Changing the way you think about your retirement savings can be one approach to increasing the amount you have put away. Consider it more in the context of a trust fund, which, if it is well-managed, will not only pay your bills when it matures but will also supply you and your family with an income to live on for the rest of your lives. This is an alternative way of thinking about retirement.
Invest ethically
Do you know how your retirement funds are being invested? As individuals become more worried about topics such as climate change, animal rights, and abuses of human rights, this problem is becoming more widespread. There are a lot of people who place equal importance on the location of their money's investments as they do on the rate of return.
Ethical investing accomplishes its goals in two ways: first, it avoids "negative" investments, such as those in the fossil fuels industry; second, it prioritizes "positive" opportunities, such as funds that are dedicated to green energy or carbon credits; and third, it promotes social and environmental responsibility.
Not only should you consider the value of your superannuation when you are on the approach of retiring; you should do so at every step of your working life if you want to get the most out of it. Making reasonable sacrifices in the present will result in significant profits over the years and will lead to a more comfortable living during retirement. It is imperative that you take responsibility for your contributions right now, while there is still the opportunity to derive the greatest advantage.
You should check the balance of your retirement account at least once every three months and adjust the amount of money you put into it based on how your life is changing and the goals you have set for it. Learn how to acquire the best returns that are also the safest and most ethical feasible, how to compare different funds, and how to maximize the fund's potential for tax advantages.
Check out our post where we dispel a lot of the myths surrounding property investments and read about how we covered investing in Melbourne real estate.
