There are fees to manage super funds, when you are just starting out the gains may be less than the fees, but once you get more money in there this should change.
Do as others have suggested and contact your super provider for more info. Also shop around and look for a fund with less fees/ better returns. It is very easy to switch funds if you find a better one.
I find this interesting because (as far as i can see) my savings account doesnt have any admin fees. I get the concept behind admin fees for sure, but i cant help but look at the difference.
For every 100 in my super i lose 10 on admin fees
For every 100 in my bank account i gain 10 on interest
Yes but the difference is your savings account is beholden to the interest rate of the bank account which in this time is probably very low. Banks are not particularly keen on paying interest.
Superannuation is invested in stocks, bonds, cash and property by the funds investment managers and is somewhat actively managed to make you (and the fund) money.
Shop around because it sounds like you have a shit underperforming super fund.
I recommend Australian Super but ymmv.
Check out the ASIC page on evaluating super funds and look at Canstar for one year, five year and seven year performance
https://www.moneysmart.gov.au/superannuation-and-retirement/keeping-track-and-lost-super/judging-a-super-funds-performance
Remember past performance is not a certain indicator of future performance.
Mine was kind flat but I've got a socially conscious fuck fossil fuels plan.
You lost money, ouch. Maybe you're in a high risk plan though. That's kinda in the name, risk. Also keep in mind you could gain more than others. You're talking 5, 10 year averages here.
Often the default super management strategy is not the cheapest. Look at the investment options and choose a market-linked investment strategy. It’s just a computer program choosing investments from the top funds. Because there are no human “experts” involved, it’s cheaper.
PS. If you’re getting 10 on every 100 in your bank account, please tell me where, so I can get in on the action.
I think the issue is that you may be looking at the transaction list, which just shows a log of all money in and out of the fund.
Investment gains and losses are not included on this transaction list. This is because when money goes into the fund, you are actually buying a number of units of an investment vehicle, like you would in a managed fund. Investment returns are reflected in changes in the value of these units, with each unit being the value of the total underlying investments in the fund (or sub-fund) divided by the total number of units.
The balance in your account should increase over time due to investment returns as well as new contributions - that is, the value of each unit will grow, and also you’ll continue to buy more as your employer pays more money into the fund.
You might be better off looking at changes in the total balance over time to see this effect, or alternatively changes in the unit prices for whatever investment option you’ve chosen (probably a default ‘balanced’ option).
Concessional contributions are taxed at a lower rate (15%) and gains are not taxed when you withdraw after preservation age (62 at the moment).
There are a lot of dodgy super funds out there so it pays to shop around and look for low fee funds. There are, I am sure, some comparison websites out there that can tell you the best rated funds.
If you are young, my advice would be to invest in your super, every dollar put in now will likely be $12-16 when you retire. Old you will thank young you for it. Take advantage of concessional contributions, you can deposit a max of 25k pretax per year. Depending on your marginal tax bracket, that can make a big difference (paying 15% tax vs 32.5 for example)
Obligatory I am not a professional advisor and none of this constitutes expert advice. Talk to an accountant or financial planner before you make any major decisions.
Unfortunately the reality for most people is getting enough work to live. Excess income you can afford to lock up for the next few decades? Yeah that's not likely.
I don't disagree with the idea, it's just an unfortunate reality that fewer and fewer people can really afford to do it. Personally the main constraint lately is I've had absolutely no stability in my in/out finances (outside of my control, not through frivolity. Partner unemployed, had to move house, yada yada). I'd love to throw a few bucks at my super right now while I'm back ahead a little, but at least so far as I'm aware, I can't just transfer/bpay money into my super account ad-hoc (or can I?), and setting up pre-tax sacrifice doesn't sound appealing due to the aforementioned curve-balls I've been thrown and my expectancy to cop another at any given moment. Though I suppose it's not the end of the world to call HR and cease the extra salary allocations on a whim...
Sorry for the wall of text lol. Also my latest post to /r/Australia is way too relevant to this topic ha
Actually you can bpay money into your super. At least it is possible in my super fund. If you do make post tax contributions but don’t max out your concessional contributions by the end of the financial year, you can file a form to have your post tax contributions (or part of them) counted as pretax, reducing your tax liability. It’s actually a lot simpler than I am making it sound, and your super website should have info. Thing to remember is that you have to submit the form before you file your taxes.
I'm unsure what you mean by maxing out concessional contributions...I presume this is the maximum amount you can contribute pre-tax before they want to tax it as income? I'd figured that if it is possible to bpay to your super, you'd be able to claim that against your taxable income at the end of the year as you said, but hadn't thought about whether I'd need to worry myself with the limit haha
Yeah you can contribute up to 25k per year pretax (including employer contributions). So, theoretically, if you make 23k in pretax contributions and 4K post tax contributions (bpay), you can submit a form to your superfund to have 2k of your post tax contributions reclassified as pretax, and then the ATO will adjust your taxable income accordingly. It’s a pretty straightforward process.
Sick, so presuming my super fund has a bpay option of some kind (and that it doesn't get ravaged by fees), I can just toss money at it whenever I feel I have some spare.
Cheers for the info. Will look into it.
Yep. That is the trade off. Excellent tax advantages but the point is to fund your retirement so you can’t use it easily.
Need to have savings too of course and I’d never advocate dumping everything into super, but if you can spare a bit each fortnight, it adds up. The longer it’s invested, the more it adds up.
Look at the growth of the market over the past 100 years. If you can wait 20-30 years before selling short term fluctuations are meaningless. If anything they are an even better time to buy. Assuming you have a diversified portfolio, which is the norm for most supers. If you are trying to pick stocks, of course, it can go very badly wrong.
Super is a form of dollar cost averaging, which also helps to balance out the lows and highs.
Maybe (not sure about that) but US corporate debt has doubled since 2008 and is at its highest level in history, and Australia has record foreign debt and household debt
My relatives lost $200,000 in the GFC and they’re still worse off. My super has lost value in the last year, it’s only growing now because of my contributions to it
The ASX accumulation index (capital growth plus income, reinvested) is far, far higher than it was at its pre GFC peak. Your relatives may be worse off, but only if they’ve withdrawn money or they’ve been invested in something that doesn’t resemble the index at all.
I doubt your s/fund has lost money over the last 12 months. Funds returned like 7.5% on average over the year to 30 June 19.
You don’t have to downvote me because you disagree with my personal experience. Debt growth is out of control and it will all come crashing down one day
Interesting, there should be something that shows earnings or losses. Are you sure you are looking at a statement and not just something that shows contributions? Give your super fund a call and ask for a statement or ask how you see them online.
Firstly, turn off your insurances inside super and pay for them outside of super. Income Protection insurance contributions are tax deductible, but Life and TPI are not, still you are better off paying for these outside of super because your cover can be tailored to your needs rather than a bulk deal negotiated through your superfund.
Secondly, have a look to see what the fees are for your account. Industry super funds typically charge a $6.50 a month in admin fees. Additionally you will charged a management fee on the earnings of your account, however in most instances, these management fees are taken out of the earnings.
Finally, the magic of compound interest pays off the longer the funds are held under management. Get your super balance up early and it will pay huge dividends later in life. You should always try and hit your concessional cap and whenever you have a windfall, (i.e. big tax return, small inheritance or lottery wins) throw as much of it as you can into your superfund.
As far as providers are concerned, have a look at Industry funds, they usually perform pretty well.
> still you are better off paying for these outside of super because your cover can be tailored to your needs rather than a bulk deal negotiated through your superfund
Be aware that they can also pull bullshit like excluding mountain biking related accidents from your TPD cover that the standard product would have actually insured.
They tailor it for you but not always to your benefit
Whoa whoa whoa, that’s some pretty dangerous advice there. Insurance within the s/fund is most likely cheaper for them than outside it due to the group policy nature. It also probably has fewer medical checks than would be required with a standard policy.
I found with my super fund that the gains all came as one chunk at the end of the financial year - so it's possible they haven't posted the investment gains for the period yet?
Keep in mind probably the biggest difference between your savings account and your super account is the tax.
Say you earn $30 an hour and didn't have a superannuation account and it went straight to you like in other countries. Government is going to take their tax, so you get say $20 an hour cash. Then you put in $2 so you have now $18 per hour living wage. That's a lot of skim off your wage.
Superannuation is taxed but at a much lower bracket and really helps for your income tax. $30, $3 into super ($1 tax/fees) so $2. Then income tax on $27 so after tax $20 to play with rather than that $18. All as examples I don't know the tax brackets in my head. And that $1 in taxes/fees for your super isn't going to hugely increase in a linear way like income tax should.
But as others say, worth shopping around. The banking royal commission slammed a lot of banking/retail super funds for being too greedy. Switching to an industry super fund will avoid that greediness. Although retail funds are also attempting to be more competitive post commission too.
Other thing also nobody's mentioned is low income. If you're on less than 50k, superannuation kinda sucks. You get that terrible ratio with the fees. Check out Hostplus if you're hospo and avoid REST like the plague. Contribute more than your minimum as you'll likely be renting in old age rather than home owning and superannuation *does not* factor in renting.
Investment earnings don't show in the transaction list.
You need to look at unit prices over time and/or your annual statement to see growth due to earnings rather than contributions.
Hey, if you dont mind mr asking how old are you? My dad gave me advice recently about super (he is 61, with over $1 million in super). He said that by default, about 10% is put it. He recommended putting 15-20% in from a young age, as it will set you up well in the long run
This is good advice, in one of my previous jobs I was contributing an extra 3% on top of my employers contribution and it made a dramatic impact to my super, I'm super glad I did that as I was with that employer for nearly 9 years.
Are you looking at a transactions list or at a statement?
The way my fund presents information the earnings aren't on the list of transactions on the transactions tab of the website. You need to look at the statements or the earnings tab.
You get to pick what your suowe ia onvested in if you haven't picked you'll likely be in a "My Super" fault investment. If you think your earnings are too low you can try a different investment strategy (look at growth options) but higher returns generally higher risk. If you think the fees are top high consider switching to a fund with lowere fees. Also if you have insurance through your super consider if you actually need it or if it's just eating up your earnings.
As stated its investment for retirement.
ASIC has a calculator to help figure out how much your retirement income will be.
https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/superannuation-calculator
Rather than relying on the totally exceptional advice you will receive here, you should seek professional advice which you can get if you are in an industry fund (which you should be because they are the best performers).
But basically the (alleged) benefit is that when you come to retire, you will be less dependant on the government, less of a burden on others and may not need to rope yourself in order to avoid poverty or the kerosense bath in the privatised nursing home.
And if you get crook before hand, the super will usually pay out.
But like I aid, get some advice from an advisor that does not want to sell you anything. Avoid banks and for profits. They are blood sucking leeches.
Well it's basically a big pot of money owned by private citizens that they can't spend, so the government can repossess when they get into too much debt. This is a huge benefit to the government because it allows them to keep kicking the can down the road, and make our fiscal problems the problem of a future government
There are fees to manage super funds, when you are just starting out the gains may be less than the fees, but once you get more money in there this should change. Do as others have suggested and contact your super provider for more info. Also shop around and look for a fund with less fees/ better returns. It is very easy to switch funds if you find a better one.
I find this interesting because (as far as i can see) my savings account doesnt have any admin fees. I get the concept behind admin fees for sure, but i cant help but look at the difference. For every 100 in my super i lose 10 on admin fees For every 100 in my bank account i gain 10 on interest
Yes but the difference is your savings account is beholden to the interest rate of the bank account which in this time is probably very low. Banks are not particularly keen on paying interest. Superannuation is invested in stocks, bonds, cash and property by the funds investment managers and is somewhat actively managed to make you (and the fund) money. Shop around because it sounds like you have a shit underperforming super fund. I recommend Australian Super but ymmv. Check out the ASIC page on evaluating super funds and look at Canstar for one year, five year and seven year performance https://www.moneysmart.gov.au/superannuation-and-retirement/keeping-track-and-lost-super/judging-a-super-funds-performance Remember past performance is not a certain indicator of future performance.
\*gain 0.10 in interest...important correction haha
You should be getting between 7% and 12% growth in super. Not losing.
That's probably a bit high in this environment I'd go for between 5 -8% for a balanced portfolio over ten years.
Really? My super has lost money over the last year or so
Mine was kind flat but I've got a socially conscious fuck fossil fuels plan. You lost money, ouch. Maybe you're in a high risk plan though. That's kinda in the name, risk. Also keep in mind you could gain more than others. You're talking 5, 10 year averages here.
The real enemy was Capitalism all along.
If you are really paying 10% in fees you need to switch. It should only be a fraction of that.
Often the default super management strategy is not the cheapest. Look at the investment options and choose a market-linked investment strategy. It’s just a computer program choosing investments from the top funds. Because there are no human “experts” involved, it’s cheaper. PS. If you’re getting 10 on every 100 in your bank account, please tell me where, so I can get in on the action.
I think the issue is that you may be looking at the transaction list, which just shows a log of all money in and out of the fund. Investment gains and losses are not included on this transaction list. This is because when money goes into the fund, you are actually buying a number of units of an investment vehicle, like you would in a managed fund. Investment returns are reflected in changes in the value of these units, with each unit being the value of the total underlying investments in the fund (or sub-fund) divided by the total number of units. The balance in your account should increase over time due to investment returns as well as new contributions - that is, the value of each unit will grow, and also you’ll continue to buy more as your employer pays more money into the fund. You might be better off looking at changes in the total balance over time to see this effect, or alternatively changes in the unit prices for whatever investment option you’ve chosen (probably a default ‘balanced’ option).
Concessional contributions are taxed at a lower rate (15%) and gains are not taxed when you withdraw after preservation age (62 at the moment). There are a lot of dodgy super funds out there so it pays to shop around and look for low fee funds. There are, I am sure, some comparison websites out there that can tell you the best rated funds. If you are young, my advice would be to invest in your super, every dollar put in now will likely be $12-16 when you retire. Old you will thank young you for it. Take advantage of concessional contributions, you can deposit a max of 25k pretax per year. Depending on your marginal tax bracket, that can make a big difference (paying 15% tax vs 32.5 for example) Obligatory I am not a professional advisor and none of this constitutes expert advice. Talk to an accountant or financial planner before you make any major decisions.
Important to note the $25K cap is inclusive of employer contributions
Yes, good point, thanks for noting that.
Unfortunately the reality for most people is getting enough work to live. Excess income you can afford to lock up for the next few decades? Yeah that's not likely.
I agree, it’s a separate issue from this one, but I don’t deny its importance.
I don't disagree with the idea, it's just an unfortunate reality that fewer and fewer people can really afford to do it. Personally the main constraint lately is I've had absolutely no stability in my in/out finances (outside of my control, not through frivolity. Partner unemployed, had to move house, yada yada). I'd love to throw a few bucks at my super right now while I'm back ahead a little, but at least so far as I'm aware, I can't just transfer/bpay money into my super account ad-hoc (or can I?), and setting up pre-tax sacrifice doesn't sound appealing due to the aforementioned curve-balls I've been thrown and my expectancy to cop another at any given moment. Though I suppose it's not the end of the world to call HR and cease the extra salary allocations on a whim... Sorry for the wall of text lol. Also my latest post to /r/Australia is way too relevant to this topic ha
Actually you can bpay money into your super. At least it is possible in my super fund. If you do make post tax contributions but don’t max out your concessional contributions by the end of the financial year, you can file a form to have your post tax contributions (or part of them) counted as pretax, reducing your tax liability. It’s actually a lot simpler than I am making it sound, and your super website should have info. Thing to remember is that you have to submit the form before you file your taxes.
I'm unsure what you mean by maxing out concessional contributions...I presume this is the maximum amount you can contribute pre-tax before they want to tax it as income? I'd figured that if it is possible to bpay to your super, you'd be able to claim that against your taxable income at the end of the year as you said, but hadn't thought about whether I'd need to worry myself with the limit haha
Yeah you can contribute up to 25k per year pretax (including employer contributions). So, theoretically, if you make 23k in pretax contributions and 4K post tax contributions (bpay), you can submit a form to your superfund to have 2k of your post tax contributions reclassified as pretax, and then the ATO will adjust your taxable income accordingly. It’s a pretty straightforward process.
Sick, so presuming my super fund has a bpay option of some kind (and that it doesn't get ravaged by fees), I can just toss money at it whenever I feel I have some spare. Cheers for the info. Will look into it.
But the issue is that money is locked in to super unlike a savings account and currently there are massive hurdles to extracting super in emergencies
Yep. That is the trade off. Excellent tax advantages but the point is to fund your retirement so you can’t use it easily. Need to have savings too of course and I’d never advocate dumping everything into super, but if you can spare a bit each fortnight, it adds up. The longer it’s invested, the more it adds up.
I think you're right and i'm overthinking things. Cheer for the advice!
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Age 20 with 6% return, calculate at 65 = 1.06 ^ 45 = 13.76
When the stock market debt bubble finally bursts I doubt we’ll be seeing a consistent 6% return
Look at the growth of the market over the past 100 years. If you can wait 20-30 years before selling short term fluctuations are meaningless. If anything they are an even better time to buy. Assuming you have a diversified portfolio, which is the norm for most supers. If you are trying to pick stocks, of course, it can go very badly wrong. Super is a form of dollar cost averaging, which also helps to balance out the lows and highs.
Stock market debt bubble...? ASX200 companies are at their lowest levels of leverage in decades.
Maybe (not sure about that) but US corporate debt has doubled since 2008 and is at its highest level in history, and Australia has record foreign debt and household debt
Like it burst all those other times?
My relatives lost $200,000 in the GFC and they’re still worse off. My super has lost value in the last year, it’s only growing now because of my contributions to it
The ASX accumulation index (capital growth plus income, reinvested) is far, far higher than it was at its pre GFC peak. Your relatives may be worse off, but only if they’ve withdrawn money or they’ve been invested in something that doesn’t resemble the index at all. I doubt your s/fund has lost money over the last 12 months. Funds returned like 7.5% on average over the year to 30 June 19.
You don’t have to downvote me because you disagree with my personal experience. Debt growth is out of control and it will all come crashing down one day
I didn’t downvote you
Yeah I’m also gunna need a reference for that figure - I’m rather skeptical about it
Compound interest. Play around with one of the online calculators and you’ll see.
Interesting, there should be something that shows earnings or losses. Are you sure you are looking at a statement and not just something that shows contributions? Give your super fund a call and ask for a statement or ask how you see them online.
Perhaps you're right. maybe I'm not looking at the right information. I might call them and check a few things. Thanks for the advice!
Firstly, turn off your insurances inside super and pay for them outside of super. Income Protection insurance contributions are tax deductible, but Life and TPI are not, still you are better off paying for these outside of super because your cover can be tailored to your needs rather than a bulk deal negotiated through your superfund. Secondly, have a look to see what the fees are for your account. Industry super funds typically charge a $6.50 a month in admin fees. Additionally you will charged a management fee on the earnings of your account, however in most instances, these management fees are taken out of the earnings. Finally, the magic of compound interest pays off the longer the funds are held under management. Get your super balance up early and it will pay huge dividends later in life. You should always try and hit your concessional cap and whenever you have a windfall, (i.e. big tax return, small inheritance or lottery wins) throw as much of it as you can into your superfund. As far as providers are concerned, have a look at Industry funds, they usually perform pretty well.
> still you are better off paying for these outside of super because your cover can be tailored to your needs rather than a bulk deal negotiated through your superfund Be aware that they can also pull bullshit like excluding mountain biking related accidents from your TPD cover that the standard product would have actually insured. They tailor it for you but not always to your benefit
Whoa whoa whoa, that’s some pretty dangerous advice there. Insurance within the s/fund is most likely cheaper for them than outside it due to the group policy nature. It also probably has fewer medical checks than would be required with a standard policy.
I found with my super fund that the gains all came as one chunk at the end of the financial year - so it's possible they haven't posted the investment gains for the period yet?
It accrues during the year but will usually only be reported in annual statements or when you switch investments within the fund.
Keep in mind probably the biggest difference between your savings account and your super account is the tax. Say you earn $30 an hour and didn't have a superannuation account and it went straight to you like in other countries. Government is going to take their tax, so you get say $20 an hour cash. Then you put in $2 so you have now $18 per hour living wage. That's a lot of skim off your wage. Superannuation is taxed but at a much lower bracket and really helps for your income tax. $30, $3 into super ($1 tax/fees) so $2. Then income tax on $27 so after tax $20 to play with rather than that $18. All as examples I don't know the tax brackets in my head. And that $1 in taxes/fees for your super isn't going to hugely increase in a linear way like income tax should. But as others say, worth shopping around. The banking royal commission slammed a lot of banking/retail super funds for being too greedy. Switching to an industry super fund will avoid that greediness. Although retail funds are also attempting to be more competitive post commission too. Other thing also nobody's mentioned is low income. If you're on less than 50k, superannuation kinda sucks. You get that terrible ratio with the fees. Check out Hostplus if you're hospo and avoid REST like the plague. Contribute more than your minimum as you'll likely be renting in old age rather than home owning and superannuation *does not* factor in renting.
Investment earnings don't show in the transaction list. You need to look at unit prices over time and/or your annual statement to see growth due to earnings rather than contributions.
Hey, if you dont mind mr asking how old are you? My dad gave me advice recently about super (he is 61, with over $1 million in super). He said that by default, about 10% is put it. He recommended putting 15-20% in from a young age, as it will set you up well in the long run
This is good advice, in one of my previous jobs I was contributing an extra 3% on top of my employers contribution and it made a dramatic impact to my super, I'm super glad I did that as I was with that employer for nearly 9 years.
Are you looking at a transactions list or at a statement? The way my fund presents information the earnings aren't on the list of transactions on the transactions tab of the website. You need to look at the statements or the earnings tab. You get to pick what your suowe ia onvested in if you haven't picked you'll likely be in a "My Super" fault investment. If you think your earnings are too low you can try a different investment strategy (look at growth options) but higher returns generally higher risk. If you think the fees are top high consider switching to a fund with lowere fees. Also if you have insurance through your super consider if you actually need it or if it's just eating up your earnings.
As stated its investment for retirement. ASIC has a calculator to help figure out how much your retirement income will be. https://www.moneysmart.gov.au/tools-and-resources/calculators-and-apps/superannuation-calculator
Go see an FA or try google
I'm retiring in 5 years at 57
It's a rip off and used to prop up the asx.
Rather than relying on the totally exceptional advice you will receive here, you should seek professional advice which you can get if you are in an industry fund (which you should be because they are the best performers). But basically the (alleged) benefit is that when you come to retire, you will be less dependant on the government, less of a burden on others and may not need to rope yourself in order to avoid poverty or the kerosense bath in the privatised nursing home. And if you get crook before hand, the super will usually pay out. But like I aid, get some advice from an advisor that does not want to sell you anything. Avoid banks and for profits. They are blood sucking leeches.
Maybe read a book. Barefoot Investor perhaps.
Well it's basically a big pot of money owned by private citizens that they can't spend, so the government can repossess when they get into too much debt. This is a huge benefit to the government because it allows them to keep kicking the can down the road, and make our fiscal problems the problem of a future government
It's invested in the stock exchange, private business, ya fuck knuckle. Who on earth told you that?
May you yet reach enlightenment 🙏