IT’S WHAT’S INSIDE THE FUND THAT MATTERS!

Hi everyone,

We hope last week’s Money in Minutes got you thinking about planning your retirement, and what actions you can be taking today to look after your future self.

Earlier this week, we came across some data that we wish didn’t surprise us. It highlighted the fact that most super fund changes by members were actually being driven by financial advisers, and not each member deciding independently. The research suggested advisers prompt a change in around seven out of every ten super fund switches that take place. And it’s often not clear whether the recommendation is in the member’s best interest or simply because the adviser prefers certain products or platforms. 

With this being the case, we want to remind you of a few important facts that determine whether your super fund is appropriate and in your best interests. And spoiler alert… it’s not really about the super fund and much more about what goes on within the super fund.

There are three core elements to ensure a healthy and well-performing super fund:

•  Low fees — fees have a large impact on your future retirement balance and how long it can sustain your retirement living. The lower your fees, the more money you have to invest and allow to compound over the decades ahead
•  Appropriate asset allocation — matching how your money is invested to your time horizon and risk tolerance is arguably the most important determinant of your future super balance (hint: growth assets are your best friend when you still have a long time until retirement!)
•  Super contributions – whilst low fees and appropriate asset allocation are in our mind the two most important elements of your super fund to get right, making extra super contributions is how you then supercharge your super! The more you contribute, the more you can grow and the more you can spend when you commence living full-time (i.e. no longer having to go to work).

So please don’t judge a super fund by its brand name. Some of the most expensive and heavily promoted super funds are rarely the best fit for your situation. 

Switching funds can be the right move when it’s based on evidence, not opinion and not what is most convenient for a financial adviser. And as we hope we have ingrained in your thinking, when it comes to advisers, those who are independent are the only advisers we think should be considered.

Within the Wages to Wealth program, we have several super fund recommendations that you may wish to review and consider if they can address your needs. There is a common theme in that all our recommendations align with low-cost, appropriate asset allocation and well-diversified index fund mantra. So, remember, it’s rarely about the actual fund and more so what’s inside it that matters!

Cheers,

Dan and Dave