5 things to think about when choosing a Super fund

5 things to think about when choosing a Super fundChoosing a super fund is not to be underestimated and selecting the right one can mean the difference between enjoying a comfortable, stress-free retirement or struggling through it. Four-fifths of Australians choose to stick with the super fund option offered by their employer when actually choosing a super fund personally can be a safer and much more economic option.

Finding the right super fund means securing a happy and comfortable future for yourself and your loved ones and so research and planning is key. Consider the following points to avoid landing yourself with unnecessary stress further along the line and to ensure you have enough super balance to fund the retirement you deserve.

1. Compare fees and charges

One of the main things to consider is how much your super fund is actually going to cost you in terms of the fees you will have to pay. Any fees or charges are going to affect your final super balance when you retire. Some super funds can charge for things such as account establishment and termination, withdrawals and contributions whereas others will have no such charges.

Look for the super fund with the most reasonable fees and avoid forking out unnecessarily. Also, try to find a super fund with minimal administration charges. Compare these different costs and choose the most economic super fund for you personally. The lower the fees and outgoing charges, the more savings you will have, which ultimately means a happier, more comfortable retirement.

2. Compare insurance policies

Deciding what level of insurance cover you want is another important decision you will have to make when you choose a super fund. Compare the insurance offered by each provider and how much it will cost you to get protection. You can often find a better insurance deal when purchasing insurance through a super fund rather than outside of the fund, and research shows that 70% of life insurance policies are now purchased through superannuation funds.

However, be sure to thoroughly research any default cover policies to make sure the terms suit you personally as many such policies tend to offer minimum protection and may not suit your individual needs. The principal benefit of insurance purchased through a super fund is the cost as policies purchased in this way tend to be cheaper overall.

3. Choose your investments wisely

There are many things to think about when choosing your investments. Generally, the higher the risk of an investment you make, the higher the possible returns. The lower the risk, the lower the returns are likely to be. Therefore something you need to consider is whether or not you will be comfortable with taking a risk with the possibility of higher returns or if you’d rather play it safe with a low-risk investment.

When thinking about the risks of an investment, it is also important to bear in mind the duration of your super fund. If you are close to retirement age, then it would make more sense to choose a lower risk investment to prevent your investment falling victim to any downward spiral that may occur in the future and eventually leaving you out of pocket.

4. Look at investment performance

An effective way to compare super funds is to look at the investment performance. However, avoid basing your decision on past performance of the investment alone as this is not a guaranteed accurate indication of how well a superfund will perform in the future. It’s recommended to look at at least five years’ of an investment’s performance history to gain a true insight into its probable performance. The key is to look for consistency of performance over this period of time.

This is very important when choosing a superfund as the more time you remain within a super fund that has a poor performance, the bigger the financial loss you will suffer and you could miss out on a big chunk of money as the years go on.

5. Research other services

Something else to consider when choosing the right super fund is any other services the fund may offer to you. Research the available services and make a list of those which suit your personal needs and lifestyle. Services that many funds offer include personalised financial planning, which is very useful for those who need guidance and advice on managing their money, as well as advice on retirement planning. Some super funds offer an online service which can be a useful feature for internet-users to access and manage their accounts at home.

The information in this article does not constitute legal or financial advice. If you would like to discuss any of the above in greater detail, please contact your usual Axis adviser. 

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Comments

  1. I had no idea that a lot of life insurance policies are bought through superannuation funds. That being said, it’s good to know you need to research the cover policies to make sure it fits your needs. Perhaps it could also be good to understand the terminology of the policies to really get a good understanding of them.

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