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Super beats property for investors

Superannuation  |  4/01/2018  |   7 min read

Superannuation funds achieved double digit returns in 2017, averaging 10.5% in the 12 months to December. Property returns for the same time period were 9.1%.

According to a report in the Australian Financial Review (AFR), this is the first time super funds have achieved double digit returns since 2013 (when the average fund returned 16.3%). It’s also a reversal of recent trends, which saw a booming property market taking center stage.

While healthy superannuation returns are good news for Australians, it’s worth taking a closer look at both sets of figures. The reality is both superannuation returns and the property market vary considerably across funds, cities, and states.  

Super returns vs property

Equip’s default MySuper investment option returned 10.57% for the 12 month period ending December 2017. That places us among the top performing super funds in the country according to a recent Bloomberg report

It also reinforces the importance of choosing the right investment options. 10.57% is a very healthy return, but it’s eclipsed by Equip’s Growth Plus option which returned 16.62% over the same period. Our International Equities option performed even better, returning 20.97%.

On the other end of the spectrum our Fixed Interest returns were 4.01% and Conservative Investment options were 5.92%. Depending on your age, risk profile and retirement goals you may actually be better in one of these lower risk options. You can learn more about Equip’s Investment options (and how to update yours) here. But it’s important to choose an investment strategy that suits you.  

A property tale of many cities

The property boom is just as diverse, and varies wildly between states, capitals, and even suburbs. While Melbourne and Sydney property prices have skyrocketed in recent years, they’ve actually gone backwards in Darwin and Perth, and remained relatively flat in Brisbane and Adelaide.

In other words, the 9.1% property returns for 2017 are mostly indicative, and don’t reflect individual returns across different cities and states.

What does all that mean for the future?

Despite those healthy returns, the superannuation industry is warning that the future outlook is volatile, and that there’s no guarantee that those double digit numbers will materialize in 2018.

Martin Fahy, chief executive of the Association of Superannuation Funds of Australia (ASFA) told the AFR, “It would be a huge mistake for people to believe these returns are sustainable. Long term out performance is very difficult to achieve.”   

This simply reinforces the need for a balanced mix of assets when it comes to building long term wealth. And while that will vary from person to person, superannuation and a family home are still considered the cornerstones of a comfortable retirement. 

 

Speak to an Equip Financial Planner about your investment options and how they can impact your superannuation. Learn more here. 

 

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. Past performance is not an indication of future performance. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383.  MySuper Authorisation Numbers 33813823017672 and 33813823017518  (‘Equip’, ‘the Fund’ and ‘the Equip Rio Tinto Fund’).

Equipsuper Financial Planning Pty Ltd (“EFP”) (ABN 84 124 491 078, AFSL 455010) is licensed to provide financial planning services to retail and wholesale clients. EFP is owned by Equipsuper Financial Holdings Pty Ltd (ABN 11 604 515 791). You can obtain the EFP Financial Services Guide and/or Privacy Statement by contacting our Helpline 1800 682 626.

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