Super fund returns may hit double digits, but don’t become complacent.
According to research provider SuperRatings, Australia’s superannuation funds are on track to deliver double digit returns for 2017, in what is being called an early Christmas present for investors.
The SR Balanced Index that measures super fund returns recorded an increase of 1.3 per cent throughout November, meaning the interim calendar returns thus far are 9.9 per cent.
“In a year dominated by political uncertainty, nothing managed to deter the global rally we’ve seen since the start of the year,” said SuperRatings Chief Executive Kirby Rappell.
“Australia’s super funds are on track to deliver double-digit gains, providing there is no late sell-off before Christmas.”
“Despite the mining boom fading from view, resources shares have delivered through 2017 and helped shield investors from an otherwise lacklustre year for earnings. Despite the benefits of a strengthening Australian dollar for imports, especially in the first half of the year, this will have detracted from returns, but investors have still enjoyed some remarkable gains from the US market, which pushed to record highs late this year.”
And while super fund returns have been promising so far, according to money experts, now is not the time to become complacent about investment – especially when it comes to retirement savings.
“As we start to approach the new year, investors should take a moment to review their superannuation fund’s performance and make sure it is delivering value for money outcomes,” said Mr Rappell.
“Planning for the future can be a daunting process, but it doesn’t have to be complicated. Simple things like consolidating your super funds can lead to lower fees, and benchmarking your returns allows you to see if your fund is meeting its investment objectives or whether it’s falling behind the pack. Many Australians have insurance in their super, and it is worthwhile checking if your fund provides it and if it is appropriate for your needs.”
So, how do you make sure your super fund is fighting fit?
Well, for a start, if you have more than one fund, you should consolidate them. It means you’ll only pay one lot of annual fees and will make it easier for you to keep track of your savings.
Check the long-term performance of the top funds and use it as a benchmark to track your fund’s returns.
Then, dig deep into the fine print of your fund. Ensure that you’re paying for the right insurance, that is, that you’re not doubling up on life insurance or paying for unnecessary income protection cover. Compare your fund’s insurance offerings against others in the market and make sure your insurance is suitable for your needs.
Investigate whether or not your provider is giving you good value. You can check your fund’s fees, governance, insurance and member service environment at superratings.com.au.
Finally, plan for your future, by setting yourself a savings goal (if you have not yet retired) or calculating an ideal drawdown amount, leaving yourself plenty in store for emergencies or later-life spending. It may also pay to seek financial advice on planning for a secure future.
As with all things in life, it’s little changes now that can make a big difference down the track.
“With the value of compounding, a small change today can result in a big impact when you retire. Getting these small things right will help when the time comes to stop working, without having to make unenviable lifestyle compromises. Despite changes to the system, Superannuation remains a strongly tax-advantaged savings strategy’” said Mr Rappell.
“As they say, knowledge is power, and all investors should ensure they use it to their advantage.”
Funds have performed well since the introduction of compulsory superannuation for Australians in 1992. Here are the top 10 performing funds over the past decade.
How does your fund stack up? Do you have any tips on planning for a secure financial future?