Watch the following video about investing in the best superannuation fund.
Superannuation is a retirement savings plan that you can gradually build up using monthly contributions paid by your employer, by you or your spouse, depending on your work status. Because a super fund is not guaranteed nor insured by the government deposit insurance scheme, you need to choose the best superannuation fund to take care of your investment.
Things to consider
As with all types of investment, a super fund has its advantages and risks which may be controlled by a skilled fund manager. This is why much of your decision to invest in the best superannuation fund will hinge on the nature of the trustees of the fund. Here’s why:
- Strict super laws: Super funds are governed by strict rules found in laws and the trust deed. Government agencies such as the Australian Securities and Investments Commission (ASIC), Australian Prudential Regulation Authority (APRA) and Australian Tax Office (ATO) regulates and enforce legal standards to protect the members and their contributions. A super fund must comply with existing rules and laws in order to qualify for tax concessions such as the lower income tax rate of 15% and to avoid heavy tax and legal penalties. A major role of the trustee is to ensure compliance with existing laws through maintenance of accurate records, minutes and important documents for the review of the regulatory agencies.
- Long term investment: When you join a fund, you will contribute money while you are working and won’t be able to access that amount for many years until you reach the minimum age of retirement. This exposes your money to risks of loss in the meantime, making the skills of the professional fund manager crucial.
- Investment strategy: Spreading your risks by investing in a good mix of safe and high risk investments prevents huge losses through counterbalancing of assets. The best super funds are invested in cash, bonds, shares of stocks, and properties. Within each type of asset you should also find diversity in companies and sectors of the market and even of the economy.
Other features such as insurance coverage, total and permanent disability insurance and guaranteed payments accompany the best superannuation fund. You can learn more about the investment strategy, asset mix, insurance benefits, and rules on availing the benefits of a particular fund by reading its prospectus well before parting with your hard earned money. And because investments take time to grow, it’s best to start building your retirement fund now.
