Here’s you… super is boring, who cares, its tomorrows problem, I don’t really understand it anyway…
Here’s us… there’s 250,000 reasons to read this. Besides, your future self will thank you.
Just think of your super as a piggy bank being filled with money to enjoy later in life. The money is 100% yours, and it’s also your responsibility to ensure your super is really super. You may not know it but your super is likely the most tax effective piggy bank you’ll ever have, and it’s great for building wealth. For most of us, super will become our biggest asset outside the family home. Imagine one day having a large lump sum of money that you can use to pay yourself a tax-free income.
Here’s the problem, if you do nothing (that’s most Australians), its estimated the average 25-year old will lose more than $250,000 in fees, which equates to over 20% of your nest egg.
Here’s problem number 2, by doing nothing, your super benefits have likely been invested into what is referred to as the “default fund” by your employer. This means that approximately 30% of your money will be invested in defensive type assets like cash. That’s ok, we all know that cash is seen as a safe investment, but what about the risk of $10 today being worth $1 in 30 years’ time? How much will tax and inflation eat away at your cash? Your cash cannot grow, its stuck as it is…
So, by doing nothing with your super, you’re ensuring that much of your super will be eaten away by fees, while the defensive, cash type assets cannot grow for your future self. We are not gamblers, but if we were we certainly wouldn’t be betting on the age pension being around for the long term. This means we need to fund our own retirements.
We cannot control what happens tomorrow on the stock market, however we can control how much we pay in fees, and we can make sure our money is invested to grow for the long term. Sorting out your super is one of the smartest financial decisions you will make. Your future self will thank you for it!