Which type of super is the best for me?


Which type of super is the best for me?

There are many super funds for us to choose. And it is important to choose wisely. At the end of the day, this is your money that is being saved all your working life for the time when you finally can retire and enjoy fruits of your labour.  

I have been talking a lot about superannuation and different strategies you can employ to benefit from this tax-driven saving vehicle, but now is the time to look at super as a product how super funds differ from each other, and which one might be good for you. 

“It takes as much energy to wish as it does to plan.”  
Eleanore Roosevelt 

So let’s stop wishing for the best future, but rather concentrate on planning it. And planning your super, getting it right and in the way that works for you is very important. Having said that, such decisions should only be made based on information, research and professional advice and not wishy-washy guessing game. Just because something sounds good on the TV add, doesn’t mean it is good for you. Just because something works for your friends, doesn’t mean it will work for you.  So do your homework well, understand your abilities, strengths and time you wish to spend on the subject to set yourself up correctly.  

Let’s start from the bottom and we will work our way up: 

Industry and Retail funds  

This is a simple version of a superannuation fund, does not require much of the decision making from you, set up for simple life situations. You more or less take what’s given to you. You have very little control over investments, insurance or costs. It is one of those set and forget superannuation products for people that really don’t want to be too concern with ongoing management or having to make any decisions around those savings.  

Corporate Funds 

This is a more sophisticated form of superannuation products, usually provided by big organisations for their employees, they can provide a great deal of investment choices and often very lucrative insurance offering, but nothing is for free, as always higher quality means higher costs.  

Wrap accounts and investment platforms  

Those types of super funds are often provided by professional advisers. They can be more expensive in the area of the administration costs but can provide a great deal of savings when comparing with the other two supers just mentioned in investment management costs. 

This is where a professional adviser can assist and support with an incredible investment choice to manage your asset diversification, which in turn can reduce the level of volatility, this is how a professional adviser can assist with tax planning as well as estate planning. Those funds could work as a replacement of a SMSF, if the main purpose of opening your own SMSF is investing into listed companies in Australia or overseas, those investment platforms can replace your SMSF, so you can have the same investment choices without any legal responsibility and lower costs. 

SMSF – Self Managed Super Fund  

This is the most sophisticated type of the superannuation you could have. This is designed for people and families that want to have full control over how their money is invested, they wish to control tax outcomes as well as estate planning outcomes. And it is a great investment and retirement savings tool, especially if used for the whole family, but as we know, nothing is for free. You take on a lot of legal responsibility as the fund’s trustee, there is quite a bit of work you have to perform every year and costs of such fund are greater. This is the reason why ATO and ASIC recommend such funds for superannuation savings over $500,000.  

So as you can see a good financial planner can assist a great deal in choosing the right super fund for you. Not all industry funds want to work with external and independent financial planners, which is a pity, as at the end of the day, it is the client who is missing out, but there are that many choices of super funds these days, that you do not have to feel stuck with the fund that is not assisting you with achieving your goals.  

So which of those funds are good for you? Which of those funds will provide you with the best financial outcome? What is it that you desire from your super? 

Are you looking for an easy hands-off fund, where all the work, responsibility and choices are given to a super fund? If this is your answer, then the first two are your best option.  

If you want to have some degree of control and you want to manage your tax, returns and legal outcomes with assistance of a professional advice, that the second or third options are the best. 

If you want to go outside of the norm of superannuation investing, you want to create more of the family growth opportunities, purchase residential properties, offices, invest into shares or other financial instruments and have a greater control, while utilising professional advice, then SMSF might be a good option for you.

“Retirement is a Journey not a Destination, so be well prepared for the Ride”

By: Katherine Isbrandt CFP®
Money Strategist & Retirement Planner
Principal of About Retirement

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