5 ways to sort your super out
A lot of my job as a financial adviser is helping people plan for the future. That means investing for the future. Superannuation is something that every employed Australian has and is a tax-effective way to save for the future. Like anything, the less you understand the more you may fear.
I trust this post moves you one step further in your journey of learning more about your own financial life.
Get to know your current fund
Make sure your money is invested to grow
Check your fees are reasonable
Check to see if you have multiple funds
Consider ethical investing
This post is for you if you’re looking to:
-Merge your super accounts;
-Find the best super fund in Australia;
-Find your lost super;
- Investigate superannuation fee comparisons;
- Or if you are simply wondering “how does super work”.
1. Get to know your current fund
If you do not know where your employer is paying your super – that is a problem! But it’s OK! It’s easy to find out the answer. Simply look on your payslip or ask your employer. You’d be surprised how many people do not know where their super payments are going.
Once you find your fund, log in online (call your fund and get details, if needed) and make sure your employer has not been sneaky and skipped on paying you. By law they only need to pay you every 3 months. Some pay per pay cycle and some monthly.
There is no real normal when it comes an employer paying into your fund. Just make sure they are!
It’s also OK to ask your employer to clarify where they are paying your super if you have not seen contributions go in to your account. It’s a nice way to say… “I’m onto you!”.
It’s worth knowing about your super as 9.5% of your wage is paid into your retirement savings.
2. Make sure your money is invested to grow
Every super fund has a mix of options for you to choose to invest your money in. Here is a hot tip, if you’re under 50 years old, you probably want at least 70% of your money in “growth assets”.
Yes, there are ups and downs in investment markets but you literally can’t touch your super until at least age 60 – so it needs to go to work. If you are worried about investment markets and you do have your money in anything less than this amount of growth you need to change this. Can you get educated more to learn how growth assets work?
Would you rather get a 3% return or 10%? This is real money.
One way you can start your education journey is to find out what an index fund is.
If a super fund has a conservative option, growth and high growth option – you do not need to mix and match these as they automatically do this within each option. Perhaps instead of having 30% of your money in the conservative option and 70% in the high growth option – just use the growth option for 100% of your money.
When you are looking at comparisons between different super funds, beware that some funds “balanced” investment option is different to the next fund. One fund’s “balanced” option may have 90% in growth assets and one may have 70%.
So, do not go by name – you need to look for the asset allocation. An asset allocation is the % allocated to different assets (such as international shares, domestic shares etc).
Try to ignore the “top 10 funds” comparisons and tables. A lot of these websites only look at the last 12 months. Every fund has a different investment strategy. Any investment in the stock market needs to be over at least 5-7 years – so why would you bother looking at a 12-month period? I am yet to see a fund in the number one spot for multiple years.
Lastly, do not chop and change investment options or super funds every 10 mins. It’s like a tree. Plant it somewhere good and let it grow, baby!
3. Check your fees are reasonable
Stop trying to get everything free. It’s OK to pay for stuff that is quality.
There is a shoe-less investor that suggests people get “the cheapest super fund in Australia”. But, have you looked to see if a different fund that is more expensive possibly might return more after fees or one that is in line with your own values, for example if you’re into ethical investing.
My grandfather always used to say, “pay for shit, you get shit”. He is dead now but yeah – I always remember that saying.
Anyway – the cheapest may work for you and it may not, just use your brain and if in doubt, you’re allowed to ask a professional (ensure a professional is charging you a once off fee for advice, not sure you need ongoing advice if you just want help choosing a super fund).
There are generally three fees associated with each super fund.
Member fee: this is usually monthly or weekly dollar amount
Administration fee: this is a percentage and is levied regardless of the investment option you have
Investment fee: this is a percentage and will vary depending on which investment option you choose
Not all funds will have all three, but all will have an investment fee – older funds sometimes hid the administration fee inside the investment fee.
I would suggest that your super fee should be no more than around 1% (investment and administration fee combined). There are some really old super funds out there that I have seen having fees about 2.5%. It’s crazy. My own personal super fund has a combined fee of about 0.82% - which I’m OK with.
4. Check to see if you have multiple funds – you only need one!
Thankfully the government has worked out that it’s not 1992 and the internet exists. You can log in to your mygov account and see all your super funds (as they are linked by your TFN).
You may also have money in “lost super” which is a like a designated holding account from that time you worked at Jay Jays in 2007 for 6 months. They kicked you out of the fund they paid into due to inactivity and now it’s part of the $18 billion sitting in lost super.
Your mygov account will tell you about lost super, too. You can also with the click of a mouse roll over all of your super into your main super account.
If you do not have a mygov account, get registered anyway – it’s handy for tax and medicare.
There are instances for example, that your employer has an agreement via an award or similar arrangement where they do not have to pay super into the fund of your choice – which I think it a joke – but that’s the way it is!
Warning: please do not move any super until you have any required insurances sorted out. Moving super can automatically cancel insurances you have and you may not be insurable again if your health has changed.
Most of your super accounts will have some disability insurance which you need. If there is one area that you need some financial advice, it’s setting up insurances (that can be paid from your super – but not part of the fund you have).
I am yet to see any insurances of quality that are default inside a super fund. You insure your car so why wouldn’t you insure you? You do not need insurance if you have enough money to live off without working.
If you are still working for money & not the social benefit while you live off daddy’s trust fund – you need disability insurance.
5. Consider ethical investing
Super is for your own future, but have you considered investing in the future of humanity? We are living in an era of choice now and you do not have to take part in things you do not believe in.
Many superannuation funds have ethical investment options. These investments options usually attract a slightly higher fee – but not over the top!
I would say these options are usually not as stable in terms of return compared to your normal blended fund (can be volatile) so maybe consider not allocating all of your super to just the one ethical option – but again, that’s your call!
Zuper who have a passion for aligning your values with how you invest your super - is one of the freshest super funds in Australia. They let members self-direct a portion of their super – 20% - into tech, health or green investments. You can even do a combo of all three. They use EFTs and index funds (remember the link I posted above?) across their options, so you don’t have to pick individual stocks, just the industry you’re passionate about supporting with your money.
If you’re not convinced what you are investing in, you need to watch this TED talk! WOW!
Note: My reference to Zuper is not a product recommendation nor has Zuper paid me (Glen James) or Sort Your Money Out to be referenced in my article. I just think they are doing something cool and different.