MONEY MATTERS MONDAY 2nd JULY 2018
The Best Super Fund?
Many advertisements, especially for industry funds, aim to create the impression that a particular fund is the best. They try to persuade us that they are better than the funds offered by the banks and financial institutions.
The basis of the claims of superiority is usually that their fees are lower or their performance is better.
The idea of good funds versus ‘bad’ funds
The super fund regulators have also expressed concern that some smaller industry and retail funds consistently perform poorly and should be merged with other funds to improve member outcomes. This reinforces the idea that there are good and bad funds.
Many workers, particularly younger ones, take little or no interest in their super and fail to choose a preferred fund. They rely on someone else to pick a fund for them. The selection of default funds for these people is the cause of much political debate.
A recent government report proposes that a top ten list of ‘the best’ funds be developed to act as default funds for workers who do not choose a fund. If this happens it will further perpetuate the myth that there is one fund or a small number that are ‘the best’.
There are many hundreds of super funds investing in many different ways. Some are cautious, investing only in cash and fixed interest and earning low returns. Others invest exclusively in shares or property or overseas and earn very high returns long term.
There are also diversified funds that invest in all areas, but even among them some are conservatively structured and others are growth funds. Each fund has members who have chosen that fund as their preferred super fund for some reason.
There is no ‘one-size fits all’
So clearly there is not and cannot be a single best super fund for everyone. Different funds suit different people. The best fund for you is the one that suits you best. Selection criteria could be based on the investments, life insurance coverage, fees, earning rates, service or other factors.
Some people want conservatively invested, low earning funds. Others choose to invest their super entirely in shares and property, accepting large fluctuations and aiming to achieve maximum returns.
For people who aren’t engaged with their super diversified balanced or growth funds may be appropriate. Older workers with larger balances usually take more interest in their super funds. They can achieve much more by engaging an adviser and making choices to maximise benefits for themselves.
The best super fund for any person is the one they have selected as suiting their needs best after considering all the relevant factors, probably with the help of a professional adviser.
This is general advice and should not be treated as personal advice. Russell Tym is an authorised representative of MoneyLink Financial Planning Pty Ltd ASFL No: 247360.
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