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Which super route should I take?

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I am 30 years of age and in an industry super fund and I was wondering if they are as good as super funds run by big financial institutions. I have noticed that some of these latter funds are doing well compared to industry funds. Also, are you better off running your own super fund? I am not really investment savvy and I only have $100,000 in my super fund?

If you’re not investment savvy and you don’t want to do the running of a self-managed super fund (SMSF) yourself, then you would need an adviser and given your balance in your super fund, it might be hard to justify the costs.

However, at your age, if you were mad keen to be a stock market investor and you didn’t mind tying up your investment into super until you retire, then the tax-effective nature of a SMSF is the best vehicle to invest in.

But assuming that you’re not like that, I now will look at industry super funds versus financial institutions’ super funds. Industry funds before the GFC absolutely caned the retail funds as we call them but lately the retail funds have fared better. I think the best industry funds compete well with retail funds and I suggest you look at the fees of a fund like Australian Super and compare them against other funds to work out what you want to do.

Some retail funds are good but expensive and if you pay too much for too long – and super is for a long time – then it eats into your returns. Against this, if you have a cheap fund that underperforms, well, that will also hurt the size of your retirement nest egg.

My advice is to get really interested in super as it is an asset akin to property and if you do your homework at an early age, your super fund will look after you when you are old aged.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Wednesday, April 13, 2011

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