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5 super myths busted

Superannuation  |  19/04/2021  |   5 min read

While most working Australians have superannuation, the reality is many people don’t bother to check-in and engage with it until much later in life.

That means there’s plenty of rumours, myths and half-truths out there about super that aren't always correct. So, let’s clear things up and set the record straight.

It’s MythBusters – Super Edition.
 

1. All super funds are the same

All super funds have the same Government mandated purpose. At a basic level they exist to provide an income in retirement.

But not all super funds are the same. Some have great investment returns and low fees. Others have low returns and high fees. Most sit somewhere in the middle.

Even small differences in fees and returns can make a big difference to your super balance when it comes to retirement. So, it’s important to shop around and compare results.

This is how we compare.

Detailed performance reports are available on our website, but the short version is we’ve been recognised for delivering Top-10 investment returns, and our fees are lower than the industry average. In fact, if you had been with Equip for the past 10 years, you would have $13,000 more in super today than a typical retail super fund.
 

2. I can’t choose how my money is invested

If you haven’t paid much attention to your super in the past, you’re probably in the fund’s default investment option. In Equip’s case it’s the MySuper option. This is a balanced mix of assets including shares (both Australian and overseas), property, fixed interest, cash and other assets. 

Equip’s default MySuper option has returned a very healthy 19.34% for the previous 12 months to 31 March 2021 and an average return of 8.38% for the last 5 years to 31 March 2021. 

That said, most super funds allow you to choose from a range of different investment options. These might be diversified investment options ranging from 'Conservative’ to ‘Growth Plus’, or sector specific options like ‘Overseas Shares’ or ‘Property’.

At Equip, we let you customise your investment option, so you can put together a mix that works for you. That means you can choose the option that best meets your personal financial goals and risk tolerance, then leave it up to Equip’s investment team to oversee your investments.   

Choosing an option that’s right for you can have a real impact on your balance.  Check out the latest returns for all of Equip’s investment options on our website.

You can update your options by logging into your account and selecting ‘Investments’ from the main menu to get started. We always recommend you get professional advice before making an important decision such as this.
 

3. I’ll never have enough super to retire

A few years ago, there were stories going around that you needed $1 million in super for a comfortable retirement. That’s been widely debunked since then.

While a ‘comfortable retirement’ means different things to different people, $300,000 in super may be enough.

But even if your super is well short of that $300,000 figure, there’s no need to despair. Super tends to start out slow, before gathering momentum in your 40s and 50s. Indeed, the average balance for people aged 30 is just $27,000.

Here’s the thing, as your balance grows so to do your investment returns. So, if you’re sitting on $100,000 and your fund is returning 8% p.a. that’s roughly $8,000 a year* (before you add contributions).

If the figure is closer to 20% in annual returns, which is what we've seeen over the past 12 months for our default MySuper option, that's almost $20,000 in investment earnings on a balance of $100,000. 

The other thing to keep in mind is that super works with the Age Pension. So even if your super balance falls short, your retirement income is likely to be a combination of the two.

*less fees
 

4. The stock market provides better returns

We’ve all heard the stories. Crypto is up 300%, Tesla did 700% in investment returns last year, that guy that made a killing on GME stock from Wall Street Bets.

The key to successful long-term investing is having a diversified portfolio. Which means you’re looking at the big picture, rather than walking into a casino and going all-in on black.

While it might not be as exciting as crypto, day trading or long shot bets, super’s purpose is to help you build long-term wealth. It does this by investing your money in carefully managed investment portfolios, including local and overseas shares. Which means when the stockmarkets go up, so too can our super balance if it is invested in shares. 

Super can also perform better than people may realise. As we mentioned above, our MySuper option has returned a very healthy 19.34% for the previous 12 months.  While this is coming off sharp falls in stockmarkets both here in Australia and overseas, it shows how super is an important part of that larger picture and long-term investment strategy.
 

5. I don’t need super

“Who needs super. I’ll just inherit the family home / invent post-it notes / be rich and famous.”

Does any of that sound familiar?

Super is such a long-term prospect, and so abstract, that it’s easy to sweep it aside in favour of more glamorous daydreams about the future. But the cold hard reality is that most of us won’t be rich and famous. We’ll be a little older, a little wiser, and looking at retirement through a broader prism.

That might mean a combination of super, your own home, eligibility to the Age Pension, and perhaps some other investments.

While we can’t predict fame or fortune, super is something we can impact. It provides a bedrock on which to build future wealth regardless of what else goes on in life.

Take control of your super

If any of the above has inspired you to take a closer look at your super, that’s great. Start by logging into your account and having a look at your balance, insurance coverage and investment options.

Once you’ve got that sorted you can look at other ways to personalise your super and grow your balance.
 

How super works. The basics explained. 

 

This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Togethr Trustees Pty Ltd ABN 64 006 964 049, AFSL 246383 ("Togethr") is the trustee of the Equipsuper Superannuation Fund ABN 33 813 823 017 ("Equip" or "The Fund"). Past performance is not a reliable indicator of future performance.

Togethr Financial Planning Pty Ltd (“TFP”) (ABN 84 124 491 078, AFSL 455010), trading as Equip Financial Planning, is licensed to provide financial planning services to retail and wholesale clients. TFP is owned by Togethr Holdings Pty Ltd (ABN 11 604 515 791). You can obtain the TFP Financial Services Guide and/or Privacy Statement by contacting our Helpline on 1800 682 626. This is general information only and does not take into account your personal objectives, financial situation or needs and therefore should not be taken as personal advice.

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