Choosing the right super risk profile at the right time can drastically increase your retirement savings.
The following considerations will help you invest wisely when it comes to building your retirement nest egg.
Types of investment options Your super fund should offer a range of investment options to consider. Here is what to know about each kind of option:
Aggressive options are high risk, and you may have to sustain significant losses hoping to maximise your return in the long-term
Growth options aiming for higher returns over longer terms may sustain some losses in poorly performing markets
Balanced options provide moderate growth but endure less damage with an economic downturn
Conservative options provide a lower return but are the lowest risk option
Picking the right option The investment option right for you depends on your retirement goals, your financial circumstances and your attitude towards risk. Your timeframe for investment should be substantial if you are looking at high-risk options as you have a considerable opportunity to recover from any losses. As your income stabilises and your retirement comes closer consider shifting to a low-risk alternative to secure what you have built up. You may also want to look to your assets like your business or various properties that may also help you fund your retirement when assessing if you can afford to take a risk.
The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.
Before consolidating your super, it is important to do the following:
Research your funds’ policy Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:
Exit fees
Insurance policies
Investment options
Ongoing service fees
Performance of the funds
Check employer contributions Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.
Gather the relevant information When consolidating your super, you will need to have the following details ready:
Your tax file number.
Proof of identity. This could include your driver’s license, birth certificate or passport.
Your fund’s superannuation product identification number (SPIN).
Your fund’s unique superannuation identifier (USI).
