{"id":1752,"date":"2016-06-01T06:09:08","date_gmt":"2016-06-01T06:09:08","guid":{"rendered":"http:\/\/www.prosolution.com.au\/?p=1752"},"modified":"2018-03-08T17:17:20","modified_gmt":"2018-03-08T07:17:20","slug":"super-might-be-a-boring-topic-but-making-some-smart-decisions-now-could-boost-your-retirement-balance-by-over-20","status":"publish","type":"post","link":"https:\/\/wealthcoach.com.au\/stage\/super-might-be-a-boring-topic-but-making-some-smart-decisions-now-could-boost-your-retirement-balance-by-over-20\/","title":{"rendered":"Super might be a boring topic but making some smart decisions now could boost your retirement balance by over 20%!"},"content":{"rendered":"

I realise that most people in their 20\u2019s and 30\u2019s pay very little attention to their superannuation because they cannot access it for 30 to 40 years \u2013 or possibly longer. In fact, it\u2019s likely that the government will push out the retirement age (i.e. when you can access super) to match the aged pension age of 67. So some people reading this might not see their super for 50 years! However, the problem with taking no interest is that you will probably waste lots of money on fees and poor returns over this time. Take 3 minutes to read this short blog that shows you how to sort out your super in 3 easy steps.<\/p>\n

Step 1: Optimising fees and returns now will have a massive compounding impact<\/em><\/strong><\/p>\n

There are three things you can control when it comes to your super:<\/p>\n

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  1. The administration and investment management fees you pay;<\/li>\n
  2. How (methodology) your money is invested; and<\/li>\n
  3. Where your money is invested i.e. what asset classes such as Australian shares, US shares, bonds and fixed interest and so on.<\/li>\n<\/ol>\n

    It is really simple to optimise these three things. Doing so will massively increase your retirement savings.<\/p>\n

    Don\u2019t pick a super fund by comparing historic returns<\/em><\/strong><\/p>\n

    No one can control or predict investment returns. Have a look at this table<\/a>. It sets out asset class investment returns since super was introduced in 1993. I have coloured each asset class and sorted the returns by year. Do you notice any patterns? There are none. And no one in the world has demonstrated a proven and consistent way of predicting them. Therefore, trying to predict or chase returns is a flawed strategy that is doomed to fail. Instead, make sure your asset allocation allows you to make money in any market\u2026 more about this in a second.<\/p>\n

    Picking a super fund based on historic investment returns is a bit like acting on a tip from a friend that did well in last year\u2019s Melbourne Cup. Just because he did well last year doesn\u2019t mean anything this year. What is more important is his methodology. Is the methodology repeatable and rules-based? Or is it highly subjective (like active funds management<\/a>)? For most active fund managers, returns are arguably influenced more by luck than skill.\u201d<\/p>\n

    Fees will add up over 35 years<\/em><\/strong><\/p>\n

    Three friends aged 30 all have $100,000 invested in three different super funds which all charge different fees. Over the next 35 years, their returns, contributions and taxes are identical. Here is what they ended up with:<\/p>\n