For most of us, super will probably be the largest and most important long-term investment we’ll ever hold. Unfortunately, many people don’t give it much thought until it’s too late. And with average life expectancies increasing every year, it means your super has to last you even longer. So regardless of how far off retirement is for you, getting some expert advice now will help make sure you can afford to live comfortably throughout your post-working life.
There are small things you can do today to deliver big benefits tomorrow. To get you thinking, we’ve put together some great ideas to motivate you, save you money and boost your super.
Why it pays to start saving now
When it comes to planning for long-term goals, like retirement, unfortunately many people put off doing something now. However, if you’re prepared to start investing early, time can be a powerful ally.
This is because year after year, the money you invest has the potential to earn more money. And if you re-invest earnings, you’ll have even more in the future. This is known as compounding and it’s what Albert Einstein called the eighth wonder of the world.
For example, if you invested $50,000 today, earned 7% per annum and re-invested your earnings, in 20 years you’d have around $200,000 (before tax). But, if you waited ten years before making the same investment, in 20 years from now, you’d only have around $100,000.
That’s an extra $100,000, or double the amount, simply by investing ten years earlier.
Superannuation is purpose-built for compounding, because by its very nature you’re unable to access your investment earnings until later in life. This means any earnings are automatically reinvested year after year.
To maximise the results, you may want to gradually increase your contributions now, to capture the compounding effect over time.
Tend Financial Planning can help you by taking you through other strategies where you can make a small change today, to result in a big difference down the track.
Reduce your super fees
How many different superannuation statements did you receive this year? If you ended up with several envelopes piling up at home you may be paying more than your fair share of fees, eating into your retirement savings.
If this sounds like you, you’re not alone. It’s estimated that one in two Australians aren’t making the most of their hard-earned retirement savings due to holding multiple super accounts.
According to a CHOICE research report1, multiple super accounts are costing Australians $1 billion a year in wasted fees.
This is because depending on the type of fund your super is held in, you may be paying between $30 and $340 in fees per account1.
Tend Financial Planning can help you consolidate your super accounts. We can also help you find your lost super.
To find out other simple tips to make the most of your money, please contact us.
Use super to save on insurance
If insurance is low on your shopping list, don’t worry you’re not the only one.
Many people give personal insurance a low priority because they don’t think they need it. However, strangely, we insure our cars or our homes without a second thought!
Well the good news is that personal insurance can be very tax effective.
Tend Financial Planning can make sure you can take care of your loved ones, and make sure that if something does happen to you, their future is secure.
What types of insurance are available through super?
Life and Total and Permanent Disability (TPD) insurance pays a lump sum and goes a long way to looking after those you’d leave behind if you died or were seriously injured. It works by paying out a lump sum in the event of your death or serious injury to help care for your loved ones or pay medical bills.
Income Protection insurance is designed to provide you with a monthly income protection benefit of up to 75% of your earnings in the event you are unable to work due to sickness or injury.
By having your insurance through your super fund, you’re likely to find your premiums cost less as tax concessions apply.
To find out other simple tips to make the most of your money, please contact Tend Financial Planning, Financial Planners in Norwood on (08) 8362 4555.
1The Super Secret Report, CHOICE, November 2006.
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