Another super outcome
OVER the next few weeks your super fund statement should arrive in the mail, and chances are it will make for good reading.
Australians with superannuation are collectively $140 billion better off thanks to strong returns earned by the nation’s super funds over the past financial year.
Research by SuperRatings found the average “balanced” super fund notched up gains of 10.4 per cent in the past 12 months — the eighth consecutive year super has dished up positive returns.
The good news does not stop there. In the past five years super funds have averaged earnings of 10 per cent annually, with total earnings of more than 100 per cent since the end of the global financial crisis (GFC) in 2009.
To put these results in perspective, if you had $100,000 invested in a balanced super fund back in late 2007, that nest egg would have grown to around $152,626 today. And that’s just based on investment returns — it doesn’t include any contributions made over the period.
Even more pleasing, super funds have recorded negative returns in just three out of the past 25 years.
Only one year — 2008-2009, recorded serious losses of 12.7 per cent, but this was at the height of the GFC when asset markets tanked.
Past returns are no guide for the future. However, these results make a compelling case for adding to your super.
Sure, the boss may be making super contributions worth 9.5 per cent of your base wage or salary, but this may not be enough for the sort of retirement you’d like to enjoy.
Adding to your super is easy. With many of us due to receive a tax refund over the coming weeks, tipping this windfall into your fund can mean enjoying far more bang for the tax man’s buck thanks to compounding returns and super’s low-tax environment.
When your super statement arrives, be sure to check it out. It will be interesting to see how your fund’s returns shape up against the broader industry.
Take a look, too, at the fees you’re paying, whether you have insurance in your fund and if the cover is right for you, and that the investment strategy meets your needs. Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.