Setting up super

Other than property, super is likely to grow into your largest asset. So given its importance you should devote some thought and time to make sure it is working well for you

Super tends to be ignored by people because the rewards from it are often not realised for many years. This conscious ignoring of your super can be an expensive mistake and by the time you realise you’ve made a mistake it may be too late to undo it. A financial adviser can help you understand your different options and help ensure you are maximising the benefits of super.

Some general tips to get the best out of your super

• You should understand why you are with a particular super fund. Is it a default fund your employer put you in, does it perform well and have low fees, or perhaps it has affordable insurance? Whatever the reasons make sure you have investigated your options and have made a conscious choice.
• Consolidate – if you have many super accounts with small amounts in them then you are spending much more than you need to on fees.
• Compare apples to apples – this is sometimes difficult but when judging one super fund against another make sure you weigh-up the benefits and costs of all the different features and benefits so your comparison is fair.

How should your super be invested?

This depends on your risk tolerance, age, earning potential and your financial goals. There are four main asset classes to choose from:

• cash
• fixed interest
• property, and
• Australian and international equities (also known as shares).

To help you make the right decisions you should speak to your financial adviser.

What makes super different?

• You can’t access your money until you reach your relevant preservation age, except under special circumstances, such as long term illness or severe financial hardship
• You can get tax breaks if you put more money in directly out of your salary – perhaps aptly called ‘salary sacrificing’
• You can choose to manage your own super fund

One of the main things to remember is that like any savings plan, the more you put in, the more you will get out.

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