Why is performance important for super funds?
Superannuation is all about setting you up for the future, providing you with a large enough nest egg so that you can retire in comfort. It’s important then, that while you’re still working, your super is working for you. The investment return that your super makes, its performance, is the key factor in this.
A small difference in average super performance, as little as 1%, can really add up over the years:
|Example: A Better Performing Super Fund Gives Larger Dividends|
|Age||25 years old||25 years old|
|Salary||$50,000 indexed at 2.5%||$50,000 indexed at 2.5%|
|Superannuation contribution||10% of salary||10% of salary|
|Superannuation earnings||7% per annum||8% per annum|
|Annual fees||1% of account balance||1% of account balance|
|Account balance at age 65||$762,162||$921,145|
As you can see, just a 1% difference in investment returns per year can result in a $158,983 difference upon reaching retirement age! So it’s obviously important to find a super fund that can make you a good return.
However, when looking at super performance, you have to remember that past performance doesn’t guarantee future success. It’s much more instructive to look at a super fund’s performance over many years, not just a spectacular return for one year. Consistent good returns are what’s important, not just one amazing year.
Ultimately, performance is an important part in choosing a super fund, but not the only thing to consider. Other factors, such as the types of investment, the annual fees, and other services offered also play an important part in the decision making process.
Learn more about how Canstar compares super fund performance, or compare super funds on our website:
This advice is general and has not taken into account your objectives, financial situation, or needs. Consider whether this advice is right for you. Consider the product disclosure statement (PDS) before making a purchase decision.
Sponsored products displayed are paid advertisements and Canstar receives a fee for referring you to the advertiser. Past performance is not necessarily a guide to future performance; unit prices may fall as well as rise. Performance information shown is for the historical periods up to 30/06/2016 and investment options noted in the product information. Performance figures shown reflect net investment performance, i.e. net of investment tax, investment management fees and the maximum applicable ongoing management fees and membership fees. Performance information is provided by Rainmaker Information Pty Ltd ABN 86 095 610 996 AFSL 461816 (www.rainmaker.com.au) which provides general information on superannuation. Any advice on this page is general and has not taken into account your objectives, financial situation or needs and is not a recommendation for your particular circumstances. Consider whether this advice is right for you. Consider the product disclosure statement before making a purchase decision. You may need financial advice from a qualified adviser.