Whereas most people end up paying a high percentage of tax on their income, super contributions are only taxed at 15%, and the fact that the funds are invested and cannot be accessed until retirement means that the discipline that many people struggle with is taken out of their hands to create a solid retirement fund.
We’ve put together a list of 5 super tips to help you get ahead TODAY!
Know how you are invested
Request a recent super statement from your provider and look into whether or not the investments are appropriate for your risk appetite and return needs. You could be invested in high risk returns or very low risk cash, do you know? The choices you make now can have a huge impact on your nest egg in the long run so it’s definitely worth doing some research. If you’re not sure which way to go, get professional advice.
Understand compounded returns
The more you have in super, the more you earn over time. If you have $10,000 in Super and your fund creates a return of 8% this year, your fund will grow by $800. If you experienced the same growth on a balance of $100,000 your fund would grow by $8,000. This adds to the principal and is in addition to whatever you contributed to super. It means that in a year of positive growth through super, the more you start out with, the more you will earn. Keep in mind not every year will produce positive growth, in investing, sometimes you lose money, but in the long run, most super funds produce positive returns. Seek advice on whether you are with an appropriate fund/ product to meet your needs and risk tolerance.
Consider Salary Sacrifice
Salary Sacrifice is making additional pre-tax contributions to super in order to build your retirement asset. It can reduce your total tax obligations and assist in increasing long-term growth through super. You need to seek advice to consider if this strategy is suitable for you as it will reduce cash flow, and there are limits to how much you are allowed to contribute to super each year without being penalised.
Research the insurances you have through super
Insurance through super can be a cost effective way of insuring yourself but there are limitations to the types of covers and the quality of the policies when they are held entirely through super. Don't assume you are covered just because you have some cover through super. Want more information on alternative insurance coverage options? We can help you with that!
Take action now to see and enjoy the results later
A lot of people don't think about super till they are in their 50's. Time flies and when you reach 65 you will have financial needs, children, maybe even grandchildren to take care of. Being prepared is about connecting the things you do today with the results you want further down the track.
So that’s it… 5 things to think about when it comes to growing your super. If you need some advice and would like to discuss your individual circumstances with us you can reach out to us via the contacts below;
Wilson Financial Office - 1300 780 826
This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither Alliance Wealth nor its related entities, employees or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.