Superannuation is one of the most critical financial assets you’ll accumulate in your lifetime. Whether you’re a young professional just starting out, a retiree relying on your super for income, or part of a family building long-term wealth, ensuring you’re in a high-performing and suitable superannuation fund is essential. But how can you tell if your current fund is the right one? Here’s a guide to help you evaluate your superannuation fund and make informed decisions about your financial future.
Understanding Superannuation Fund Performance Metrics
The first step in assessing your super fund is understanding its performance over time. While past performance doesn’t guarantee future returns, it can indicate how well the fund has historically managed investments.
- Compare your fund’s long-term returns (over 5 to 10 years) against the industry average and similar funds. This will give you a clearer picture of how it measures up.
- Look at a mix of growth and stability metrics. Check how the fund performed during both market highs and lows to understand its resilience.
- Use tools like the ATO’s YourSuper comparison tool to benchmark your fund’s performance.
Remember, a good super fund strikes the right balance between reliable returns and your risk appetite.
Assessing Fees and Costs Associated with Your Fund
Did you know excessive fees can significantly eat into your retirement savings? Understanding how much you’re paying and what you’re getting in return is crucial. Look closely at:
- Administration fees for managing your account.
- Investment management fees for overseeing the fund’s portfolio.
- Other fees, such as switching charges, advice fees, or exit fees.
Say you’re paying $600 per year in fees—and another fund offering similar returns charges just $300 annually. Over 20 years, that $300 difference could add up to tens of thousands of dollars in lost savings. Make sure you’re getting value for every dollar you spend on fees.
Considering Investment Options and Risk Tolerance
Superannuation funds offer a variety of investment options, from conservative to high-growth portfolios. Choosing the right one depends heavily on your personal financial goals and stage of life.
- For young professionals, more aggressive, growth-focused strategies might be a good fit to maximise long-term gains.
- For pre-retirees or retirees, lower-risk options (like balanced or conservative options) can help safeguard your savings.
- Check if your super fund allows you to customise your investments. Some funds offer ethical or sustainable investment options, which may align with your personal values.
Reviewing your fund’s investment mix and ensuring it aligns with your risk tolerance is a key aspect of being in the “right” fund.
Reviewing Insurance Coverage Within Your Superannuation
Many superannuation funds come with built-in insurance, but it’s important to evaluate whether the coverage meets your needs. Typically, funds offer:
- Life Insurance (Death cover)
While insurance within super is often more affordable than external policies, make sure you:
- Understand the levels of coverage provided.
- Confirm your insurance premiums aren’t unnecessarily high and eroding your balance.
- Check if the coverage is suitable for your personal situation, especially as your family grows or circumstances change.
If insurance is important to you, it’s worth checking whether another fund might provide better options at lower premiums.
Seeking Financial Advice for Personalised Superannuation Planning
Navigating the complexities of superannuation can feel overwhelming. That’s where professional financial advice can come in handy. A financial adviser can:
- Assess whether your fund aligns with your retirement goals.
- Offer tailored recommendations on consolidating your super, switching funds, or maximising contributions.
- Provide insights into tax benefits and strategies to boost your balance.
While seeking advice comes with a cost, the returns on a well-optimised superannuation strategy can far exceed the initial expense.
Is It Time to Reevaluate Your Super?
Reviewing your superannuation fund doesn’t have to be complicated, but it’s a step you should revisit regularly, especially as your financial circumstances evolve. Whether it’s comparing performance metrics, assessing fees, or seeking tailored advice, each decision you make now could significantly shape your financial future.
Start by taking a moment to ask yourself one question today: Am I in a good superannuation fund? If you’re not sure, it’s never too late to explore better options that align with your goals.
Remember, your super isn’t just an account. It’s your future security. Make it work for you.
If you would like to improve your current investment strategies or are looking to start your investment journey, click here to organise a complimentary 20-minute phone call with an EPG Wealth adviser.