Extras to up your financial game15 Nov 2022 3 min read
Set your financial goals and started saving? Now it’s time to take your financial fitness to the next level by adding some extra moves. Knowledge is power — learning more about the nuances of growing your money will help you build a strong financial future.
Power up your super
Your superannuation is a vital component of your financial success.
While super may seem untouchable until you retire, don't forget that it's 10.5% of your salary, which is a significant chunk. If you were underpaid by almost 11%, you would care about that. You should care about your super too.
The contributions your employer makes will go a long way, but they're just one part of your super. To maximise your savings in super, there are a few elements you should look at.
- Extra contributions — putting even a small additional amount into your super each payday can make a major difference over time. You may be able to salary sacrifice, make contributions from your after-tax pay and, under certain circumstances, be eligible for a government co-contribution. You may also be able to contribution-split with your partner. All of these contributions strategies have limits and tax implications, so be sure to check the details.
- Fees — fees can vary significantly between funds, so you should check them, bearing in mind also your insurance cover and the fund’s returns. It's a good idea to compare super funds so you know you're with a fund that suits your needs.
- Insurance — the cost of insurance varies between super funds and levels of cover. You should compare the cost, features and benefits of insurance between funds while considering what insurance you need for your circumstances.
- Returns — look at super returns after fees and tax to see if you are getting value. If your fees are higher and your returns lower than a comparable fund, that’s a worry. But if both your fees and your returns are higher, then your fund’s management style may be worth the extra fees.
- Investment choice — most super funds offer different investment options. It’s important to understand how much investment risk you're comfortable with and choose your investments accordingly. Generally, if you’ve got a while until retirement, you have more time to ride out investment highs and lows, so you may decide to choose higher risk, higher growth investment options. People who are closer to retirement may move into lower risk, lower growth options to safeguard their balance from drops in the market. If you’re not confident about making these decisions, talking to a financial planner can help.
Investing (in) yourself: the share market
If you’ve got super, you’ve got a share portfolio already. But a lot of people find the thought of investing in shares themselves daunting.
It doesn’t have to be. Today it’s easier than ever to set up an online share trading account and take advantage of a great range of free investing education resources before dipping your toes in and placing your first trade. Plus, you don’t need a lot of cash to get started — and you can build a portfolio over time with an automatic regular investment plan.
Another option is to look at pooling your resources with other investors in a formal structure run by professional investors. That way, you get diversification and you may be able to invest in asset classes (such as infrastructure) that you might not otherwise be able to access as an individual investor. Some popular and accessible examples are managed funds and exchange traded funds (ETFs).
One of the most important things to do before you start investing is to identify your tolerance for risk, as well as your investment timeframe. These will dictate the types of investments that are likely to suit your needs and goals. If you’re not confident investing without guidance, you can get help from a financial planner.