Choosing A Super Fund
One of the most common questions I get asked is “what super fund should I be with?” The absolute truth of the answer to this one is “I don’t know. What do you want from your superfund?” It might sound strange that my immediate answer is that I don’t know but please let me explain.
Like everything else in our lives, superfunds come a range of shapes, sizes, features and what is right for me may not be right for you.
For example, most of clients are shocked to find out that regardless of your superfund you have an array of investment options available. For example, I have X fund, does not explain how your money is actually invested.
Each fund may have their own default strategy but inside of that there will be a world of investments that are held inside of your investment option.
For me, it is essential that I have a world of investment options (including direct shares) but more importantly is that I have clarity over where my money is actually invested, if I am using an ETF/Index fund or fund manager knowing what the actual holdings and costs are.
As someone who also values a highly engaging technological experience it is important for me that my retirement assets offer detailed reporting, easy of use and an app that is top tier.
Needless to say, if looking for a vehicle that offers a high-end experience and like cars, I can’t get a Ferrari for the price of a Corolla. Or at least I can’t get a Ferrari that actually runs smooth for that price, but if you find one on Carsales please let me know.
A common misconception is that in order to have control and clarity over your retirement savings is that you need an SMSF. There are plenty of options out there that will enable you to do this with the added complexity of having an SMSF (although for the right clients SMSF’s can be a great vehicle but they certainly are not for everyone).
The typical reason for setting up an SMSF is control over your retirement savings but if you going to utilise a relatively simple investment strategy (a mixture of shares, managed funds, fixed income etc) it may not be the most cost effective or appropriate investment vehicle for you.
However, there are a few investments that you can hold in SMSF that other funds don’t offer including; direct property, collectibles, art, cars etc but unless you are determined to own these inside your retirement savings it might be better to not set one up at all.
Assuming that you have decided the level of involvement and control you want to have over your retirement savings the next things are to consider will be: the fee’s you will be paying, if using a predetermined investment strategy (i.e. a balanced or lifecycle style investment option), the level of insurance cover within your fund and will this fund choice enable you to achieve your desired retirement outcomes.
At the end of the day, your choice of fund is immensely less important that your underlying investment strategy, contributions and risk appetite.