Most people are about to receive their annual super statement to 30th June 2025. The annual returns have been around the long-term average, between 6% and 10% depending on which portfolio you are in and how much risk or volatility you’re comfortable with.
This year’s returns are around average, but they do fluctuate from year to year. For the previous three years they were typically 2% to 4% higher and the 2021 Financial Year was boomer at around 20% to 30%. These returns sound great but don’t forget that there was very little return in 2019 and 2020 on the back of the COVid pandemic. When you sit down with a Financial Planner and get some advice about your super and finances, you learn that there are more than just default Industry Super Funds. Other types of more sophisticated super accounts include Retail Funds and Self-Managed Super Funds.
Retail Super Funds are where you decide to purchase a fund from a product provider, usually with guidance from a Financial Planner. Modern retail Super Wrap offerings have thousands of investment choices. Care and guidance need to be taken to ensure your portfolio of investments is well structured with such a huge choice. This choice enables your portfolio to be customized to say protect against market downturns if you are drawing a pension or to screen out investments with questionable ethical or environmental credentials if that’s your preference. These may suit people with higher balances or who are making larger contributions and want more control and flexibility around investment options and the potential tax savings on transferring to pension phase after age 60.
Self-Managed Super Funds are where you set up your own super fund, usually with up to 3 other family members so you can pool your funds to invest. SMSF’s offer the most investment choices and flexibility, including direct property, but they are expensive. The ATO suggests the minimum balance to justify the set up and ongoing costs with a SMSF is $500,000. Purchasing a direct property in a SMSF comes with even more costs so it is generally only for those with very large balances or used for business premises. There are significant compliance requirements and most SMSF’s are paying administrators, tax agents, auditors and financial planners each year.
The key with super is to ensure you have a fund that matches where you are in your financial journey and not something that you fell into or suited where you were years ago.
For a free consultation with local people who understand the complexities of these or any other financial matter, contact Eclipse Financial Planning at Cannonvale on 49467359 today, email whitsunday@eclipsefp.com.au or visit www.eclipsefp.com.au
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