Imagine you are starting your very first job, you are probably nervous, excited and a little confused. You are asked to fill out all these forms and are probably googling words to make sure you are filling in the forms correctly. You get to the page where you have to give the details of your Superannuation account or choose to use the employer’s superannuation. What do you do? How do you choose which super fund to go with? Confused? Not surprising.
Below are five simple steps to choosing the right fund for you.
Step 1: What is it costing you?
Superannuation accounts charge fees, usually a percentage based on your account balance, different superannuation accounts, different fees. Throughout the years that your employer is putting Super Guarantee payments into your account, fees are also being taken out. At the end of the day look for a super fund that isn’t going to cost you an arm and leg.
Step 2: Think about what would happen if you couldn’t work anymore?
Did you know that you can hold insurance cover within your super account? Now it is time to compare what insurance is offered by each super fund? Most super funds will offer you default insurance cover; however, this may not be suitable for your needs. It is important to look into what the insurance cover would cost you, as this will also decrease you super balance over time.
Step 3: How do you want your money to be invested?
Choosing the way your money is going to be invested can play a role in your investment returns. Typically, a lower risk investment will give a lower return and a higher risk investment will give you a higher return (depending on the market of course). The expected duration of your super fund may influence the level of risk you choose; however, you can always change your investment options in the future.
Step 4: Past performance isn’t guaranteed!
Even though you don’t receive this money straight away, it is still important to choose a super fund that is going to invest your money wisely. You should research the past performance of super funds, but don’t rely solely on the past performance, because this isn’t guaranteed! Always look at the past five years investment performance. Remember, consistency is key!
Step 5: Revaluate
Remember, once you choose a super fund you aren’t locked into it forever! If your situation changes, don’t be afraid to revaluate your super fund! You are preparing for you retirement after all!
If you are still not sure which super fund would be best for you, arrange a time to chat with a financial adviser.