Putting money into superannuation

Why invest in super?

• Growth – it can increase in value.
• Tax-effective – because super money is taxed at a far lower rate than other income or investments, your funds may grow faster than if invested elsewhere.
• Co-contributions – the Federal Government may contribute to your super.

Disadvantages

• Performance isn’t guaranteed – due to market dynamics, funds often don't perform as well as you might have expected. You are dependent on the skill of the fund manager for your returns.
• Fees – management fees for funds vary, and in some cases, can be high.
• Locked – you generally can’t access your money until you are 65.

Who invests in super?

• Working people who want to be financially secure in retirement.
• People who want a regular income when they retire.
• Anyone looking for investment growth to build wealth.

At some point in our lives we want to stop work and need money to live on. Superannuation is money that your employer is legally obliged to put away on your behalf. It is a percentage of your pay.

This money, along with any money you contribute yourself, goes into a government-regulated fund, which is normally a form of managed fund.

A superannuation fund is intended as your retirement income and you can only access this money before you retire under special circumstances.

You may be young now, but money needs time to grow in an investment – including super. So the earlier you start contributing to super, the bigger your final amount could be…possibly millions if you begin now! So why wait?

Thinking ahead

When you are working out how much you are going to need for the wild lifestyle you've planned, don't forget inflation. Remember that prices will go up, so your money today will buy less in the future and you'll need more of it.

The good thing is, tax won't cut into your super funds as much as it will into your other income. This is because the tax rate on money invested in super is generally lower.

It doesn't matter how old you are. Superannuation is relevant to everyone. Learn more about how it works and how to make it work for YOU.