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When you’re starting out in your career it might seem a bit strange and counterintuitive to already be considering retirement. But getting set up with the right super fund and learning what’s important from the get-go, will save you in the long run.
Below, we’ve highlighted 6 things to consider before you hunker down with the fund of your dreams:
Investment Options
The way your super is invested greatly impacts the amount of money you’ll have in retirement, so if you want solid long-term growth for your super, the companies that your super invests in need to be profitable. Thankfully, you can often achieve this while having your fund align to your ethics and values.
That’s because super funds which invest responsibly typically outperform those that don’t according to the Responsible Investment Association Australasia. Not only can they benefit your savings, they also do good for society and the environment in the long term. What’s not to love about that?
Try to look for super funds that are certified responsible investors like Active Super that opt only to invest in assets that aim to provide good long-term returns, but also have a positive impact on the world.
Fees
Fees are something that all super funds charge. While administration fees are a necessary thing to cover the general cost of managing your super account, this doesn’t mean you need to be overpaying.
When choosing a super fund, make sure you take fees into account. High account fees can take away from your savings and impact your bottom line when you retire.
In Australia, it’s a legal requirement for super funds to show fees based on a $50,000 super balance as an example in their product disclosure statements (PDS), so have a look there. You can also look at comparison sites like Canstar to see which funds are performing well and compare fees.
Investment Performance
It might be tempting to look at the best performing super fund of the previous year and go with that one, however, super is a long-term investment (you may have your super for 40 or more years!), so one year’s best-performing fund won’t necessarily be next year’s top-performer. It’s therefore important to look at the fund’s longer-term performance to make sure it’s consistently growing. But always remembers that past performance isn’t necessarily an indicator of future performance.
Super funds generally provide a range of investment options with varying levels of risk and expected return associated with each. What’s important to remember is that the higher the expected return, the higher the risk that the investment option may have a negative return. Given that, most young people will choose a higher-growth option, so if there is a loss, there’s still time to recoup your losses and benefit from the higher expected growth over time.
Unique Benefits
Some super funds come with unique benefits that do more than just help you save for retirement, so look out for these. Benefits might include discounts on insurance and home loans, financial planning offers, or retail perks that can help you contribute more to your super at a time that you might not be on the highest salary.
Active Super Booster offering is one good example. When you sign up for the program as an Active Super member, and then shop at participating retailers online or in-store, you’ll receive a proportion of your purchase as a top-up to your super – covered by the retailer. Check it out, along with the T&Cs.
These types of shopping rewards could also be useful for those taking a career break or parental leave since the automatic contributions offer an easy way to top up your super while employer contributions aren’t coming in.
Services
The quality of service you receive from your super fund can make a big difference. Having a fund that makes it easy to do things like make changes to your super online can save you a lot of hassle.
When comparing funds, it’s good to ask yourself how easy it will be to access your super balance and performance. Even in the digital world we live in, there are still funds out there which only send paper statements every 6 months, so try to make sure you’ll have easy online access if that’s what you need. Super funds with their own mobile apps make it even easier to access your information on-the-go.
Customer Support
Questions are bound to arise when you’re new to a super fund and this makes it all the more important to be able to access reliable customer support. Make sure the super you go with has options available to reach out for help through online forums or chat options, by phone, or even in-person. Getting your questions answered quickly and comprehensively will make your saving journey so much easier.
Any advice in this article is general only and does not take into account your investment objectives, financial situation or particular needs. Before making a decision about the advice or any product mentioned in this document, you should consider whether it is appropriate for your personal circumstances. Past performance is not a reliable indicator of future performance.