by Jason Fittler
For the vast majority of people their super will be their biggest asset.
But who is looking after it?
You look after your home which is a non-income producing asset. You continue to throw money at this lifestyle asset making it better or upgrading to a bigger better home.
However, unless you are prepared to sell, your home will not support you in your retirement.
On the other hand your superannuation will provide you the income you need to live off in retirement and will make the difference between a great retirement and simply surviving the last years of your life.
What about the age pension?
For a single it is $21,000 pa ($400 per week) and a couple it is $31,700 pa ($600 per week). If this is your fallback position try living on this for 6-months and see how it feels.
In January “My Super” starts or should I say “Their Super”. This will mean slightly lower fees for those who have balances over $4,000 (so make sure if you have a number of Super Funds you consolidate) but you get no advice and no access to advice unless you pay up front. However, your fund manager will still charge you between 0.85% to 1% in ongoing fees, and upfront fees of around 2%.
Super funds are big money for those who run them and now a source of funding for infrastructure projects.
At present around 83% of Australian’s do not get financial advice as such they have little understanding of how their super is invested. It also means that the people who run the super funds do not know your expectations and will invest your money as they think is best. We are in an economic period where our economy is slow, unemployment is on the rise and our government has a large deficit.
The government still needs to stimulate the economy, remember the school building and insulation stimulus projects of the Labor Party.
These projects take money and the government currently has none, but your super does.
In poor economic cycles the government will undertake large infrastructure projects building roads, rail and dams etc. If you are old enough you will remember the Snowy Mountain project. These projects create jobs and allow money to flow into the economy to provide stimulus, in layman's terms it jump-starts the economy, which is good for all.
Your Super will be the money used to fund these projects.
However, many of these projects fail, such as the Brisbane Riverway project and the Sydney airport link. Investors lost their savings (Super) while the investment banks made their money for putting together the deal. Infrastructure projects are very long-term, are highly geared and pay low yields. History also tells us that they are high risk and perhaps not what you want to invest in.
So I ask you again, if you are not looking after your super who is?
My Super is easy, you just do nothing and someone else plays with your money and future.
The alternative is to get some advice and make sure that you are looking out for you, because no one else will.
Last thought. Wealth is created through a combination of getting the investments right, and regular savings. Make sure you are putting extra into your superannuation (regular savings) you will save tax and have a great retirement.