Why it matters:
Choosing a super fund is one of the biggest financial decisions of most people’s lives.
Unfortunately, there’s a huge difference in the fees and performance between the best and worst performing super funds.
In fact, for an Australian earning the average full-time income, the difference for their super balance between a fund with a return of 8.5% p.a. compared to a fund with a return of 4.5% p.a. works out to be over $478,000 after inflation over the course of their lifetime (age 25-65).
What to look for in a super fund:
Do they have suitable options consistent with your risk profile?
Your risk profile is essentially the amount of risk you’re willing to take to achieve your desired return. Some funds have a very limited choice of investments. It’s generally a good idea to choose a fund with multiple options within your risk profile so you don’t have all your eggs in one basket.
How have the investment options consistent with your risk profile performed?
As illustrated above the performance of your fund has a huge impact on the funds you will have at your disposal during retirement. See if your fund is in the top 10.
What fees do they charge?
The fees that the fund charge also have a large impact on your retirement balance. Use our fee calculator to find out how much you’re paying in fees and how much you could save by switching to a lower cost fund.
Insurance within the fund?
Most Super funds will come with some amount of insurance cover. We always recommend assessing your insurance needs and comparing the wider market of insurers to ensure you have the most appropriate amount of cover and the best insurer for your situation.
Where to Start?
The best way to start is to do what you’re currently doing – some good research to boost your general understanding of super and what to look for.
Once, you’ve developed a better understanding of super and you’re still unsure about which fund you should be with, then you should seek advice. You can do this automatically via our Digital Advice service or by contacting us to book a consultation with an adviser.