mon­eytalks

Western Suburbs Weekly - - Street Watch -

"Ihaven't taken much no­tice of su­per un­til now. What should be the first steps for a begin­ner?"

The re­ally great news about su­per is that the ear­lier you start, the ear­lier you can af­ford to re­tire. In­deed, due to the mir­a­cle of com­pound in­ter­est, start­ing early can tur­bocharge your end re­sult by much more than you might re­alise.

While it may seem a lit­tle fu­tile to be putting aside small amounts ev­ery week when you are young and on a low in­come, those lit­tle de­posits soon add up. With decades of com­pound in­ter­est to come, start­ing a su­per ac­count with your very first part-time job is a much more ef­fi­cient way of sav­ing than try­ing to top up your bal­ance with much larger sums when you are older and have less time for com­pound in­ter­est to work.

It is much bet­ter to save smarter than work harder and the ef­fect can be so dra­matic that you could eas­ily beat some­one who dou­bled their much larger su­per con­tri­bu­tions for a decade when they turned 50 just be­cause you started a decade ear­lier than they did. Say you sock away a rel­a­tively small sum of $10,000 in su­per when you are young and then leave it un­touched for 40 years be­fore re­tir­ing.

As­sum­ing a 6.5 per cent com­pound­ing re­turn, that $10,000 would have grown to $31,400 in to­day's dol­lars, not to men­tion the ex­tra money that sub­se­quent su­per con­tri­bu­tions have added.

So start­ing early with your first job, choos­ing a su­per ac­count with low fees and good re­turns and mak­ing sure you pay only for in­sur­ance you need is a fan­tas­tic way to achieve a stress-free re­tire­ment.

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