An investment often forgotten by many clients is Superannuation. Many advise that they cannot access it so they ignore it until they get closer to retirement.
The problem is that if you treat superannuation as you do other investments you could be surprised at how much extra you could have for retirement. The earlier you start the easier it will be.
Some ways to grow your superannuation are:
• Roll in your Superannuation. Make sure your Superannuation is in one Fund (if possible) this may reduce the fees that you are charged and also may it easier to keep track of.
• Find Lost Superannuation
• Voluntary contributions
Even small amounts of contributions can make a difference. If you are on a higher tax bracket you may be surprised as to the difference it can make if you salary sacrifice.
See the example below of salary sacrificing $20 per fortnight for 30 years.
The Magic of Compounding (1)
The light blue sections of the graph show the effects of compounding earnings and the dark blue sections show the regular contribution of $20 per fortnight over 30 years.
Feel free to contact us to review what tax benefits you could benefit from. Many people think they are unable to control their Superannuation Investments. There are so many options available but it is important that you talk to a specialist who can assist you with investment choices.
1. Assumptions – The above figures are based on projections in today’s dollars, assuming an investment earnings rate of 7% p.a. after fees, tax, and inflation (CPI % movement) of 2.5% p.a. The investment earnings rate of 7% p.a. is based on guidance provided to consumers by the Australian Securities and Investment Commission. This guidance suggests a projected earnings rate of 8.5% p.a. for funds with similar asset allocations to the QSuper Balanced (Default) option. An allowance has been made for tax of 6% and QSuper fees [the Accumulation QSuper Balanced (Default) option 2008/2009 MER of 0.73% p.a.] and then rounded to give the rate of 7% p.a. The projection assumes contributions are paid at the beginning of each fortnight, and earnings are calculated and paid fortnightly. Actual investment earnings may differ from the above projected investment earnings. Actual outcomes may vary from the projections. The projections are not intended to be relied on for the purposes of making a decision in relation to a financial product, including a decision in relation to a particular product, fund or strategy. The QSuper Board of Trustees, QSuper Limited, and the State of Queensland expressly disclaim all liability and responsibility to any person who relies, or partially relies upon information or projections from the calculator. 2. In years with negative returns, there will be no earnings to reinvest.