Maximise your super – a simple guide

This article is about how to maximise your super, in particular minimising fees and having the right investment option in your accumulation super fund. If you are 30, taking an hour or so to make sure these are right could give you an extra $300,000 by the time you are 60. Even if you are 40 you could get an extra $140,000.

I have intentionally not included the benefits of making additional contributions or the cost of personal insurance in this article. I will cover them in separate articles.

Case study

To show why looking at your fees and investment options is important, let’s use Chris and Emma as an example. They are both 30 years old, work for the same employer, already have $50,000 in super, and earn $100,000. Chris takes the time to maximise his super. He finds a fund that gives him the best investment option with fees that are 0.5% lower than he is already paying. The investment option should give him at least 0.5% higher returns every year. Emma doesn’t change hers. By the time they are 60, Chris is likely to have at least $300,000 more in his super than Emma.

If Chris and Emma were 40 and had $100,000 in their super, Chris would still have $140,000 more when he turns 60. Not as dramatic, but still a good return for an hours work.

How to do it

Step 1 – Get your paperwork

The first step is get the Annual Statement your fund sent you recently. If you can’t find it, get onto your fund and ask them for a copy of it.

Step 2 – minimise your fees to maximise your super

On about page 3 or 4 there should be a section titled Fee Summary or Funds Transferred Out. Each fund name their fees differently, but what you are looking for are all fees that you pay except for the Insurance Premiums (or Insurance Fees) and the Government Contribution Tax.

Once you get your total fees, divide this number by your total closing balance and multiply by 100. If the answer is less than 0.3%, you are going well, between here and 0.5% is OK, but anything higher than this and you need to either look at your investment options or consider changing funds. If your fund doesn’t have any investment options that could bring your total fees to below 0.5%, look elsewhere.

However, before you make the move to another fund, make sure you check your personal insurance. I will cover insurance separately, but you don’t want to make the mistake of moving funds before you have other insurance in place.

Step 3 – having the right investment option will maximise your super

Generally, younger people should have more growth assets (such as shares and property) and as you get older you move to more conservative assets. That said, you should also consider things like your other investments, your risk tolerance and your need to take risks.

As a guide, someone around 30 to 50 years old is probably best having between 80 and 100% in growth assets. Ideally, you should ahve a diverse portfolio of indexed investment options. Not only do these have lower fees, but they generally give higher returns than other investment options.

Step 4 – celebrate your great work!

Step 4, is the best part. I can’t tell you how to do it, but reward yourself for taking the time to think about your future. Be generous! It isn’t everyday you get to make an extra $300,000 for an hour’s work.

Yes, I know this all sounds simple. It really is.

If you don’t know where to start and would like some help reviewing your super please book a chat via the button.

About the Author
Phil Harvey is an independent financial adviser. In 2017 Phil set up his company Construct Wealth to help clients best manage their finances so they focus on what is important to them. He is a founding member of the Profession of Independent Financial Advisers and a tax financial adviser, registered with the Tax Practitioners Board.

General Advice Warning
This advice contains general information. It may not be suitable to you because it does not consider your personal circumstances. Phil Harvey and Construct Wealth are authorised representatives of Independent Financial Advisers Australia (AFSL 464629)