Dominic Kwok
Dominic Kwok

Senior Financial Adviser


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How to grow your super balance year after year

Being stuck at home in endless COVID-19 lockdowns has given many people time to think about their financial future, if new enquiries to our advisers are any guide.

That said, the average single professional or couple in their 30s or 40’s probably spends more time thinking about what colour to decorate the kitchen, than they do about how well their superannuation is growing or whether it is optimally invested.

That’s one of the reasons the Federal Government has introduced annual reporting of the best and worst performing default or ‘MySuper’ funds, in an effort to encourage people to engage with their Super.

While the intended transparency is desirable, the move has not been without controversy due to the difficulty in making fair apples with apples comparisons in this space. But if you are engaging with your Super for the first time in a while, here are 3 things to consider to ensure you make the most of it:

1. Focussing on your super makes it grow

Simply taking deliberate action on your super will result in a higher balance for most people.

What’s more, the compounding nature of super means if you expect to have high earnings over your working life, the sooner you get advice, the better that final super balance will be.

Sitting down with an adviser and modelling different outcomes based on various inputs at different life stages, provides clarity on how to fund the lifestyle you want in retirement. Regular reviews with your adviser will keep you on track as life changes and you move from accumulation to the pension phase.

2. Risk and return settings should be right for you

Most funds have a range of investment options, from conservative to balanced and growth funds. Which one is right for you depends on your personal risk profile, which is based on a number of factors. A good adviser can walk you through and model your options.

Being invested in the wrong option - typically investments that are too conservative when someone is young and in the high-income earning years or too growth-oriented in the pension phase - is a common issue we see and something that can short-change your super balance by tens, or even hundreds, of thousands of dollars.

3. Expert investment advice delivers results and peace of mind

Research shows people get great peace-of-mind from knowing their superannuation is well-invested . Given it’s one of the biggest lifetime investments most people have, getting good advice is a no brainer.

But beyond some initial advice about your super set-up, it’s worth considering an ongoing relationship with an adviser. Recent research by Russell Investments has indicated that ongoing professional advice can add 5.2% of value per annum.

Importantly much of this additional return comes not from asset allocation or investment selection, but from advisers supporting their clients with investment behaviours across the investment cycle.

As Bronwyn Yates, director and head of business solutions at Russell Investments, explains: “Non-advised investors struggle to make the correct decision when markets are volatile, and often attempt to time the market. This is an issue which plagues both those with loss aversion, and those convinced they can beat the market. It’s also a timely consideration for the growing ranks of millennials and Gen Z turning to fin-fluencers as their source for financial advice.” Unfortunately, you can’t simply turn on a trusted advice relationship in the middle of a crisis, so it’s worth considering investing in an advice relationship for the long term.

Tick these three boxes and you’ll be well on your way to growing your super year after year and breathing easy about your lifestyle in retirement.

If you have any questions about optimising your super, contact your FMD adviser.

General advice disclaimer: This article has been prepared by FMD Financial and is intended to be a general overview of the subject matter. The information in this article is not intended to be comprehensive and should not be relied upon as such. In preparing this article we have not taken into account the individual objectives or circumstances of any person. Legal, financial and other professional advice should be sought prior to applying the information contained on this article to particular circumstances. FMD Financial, its officers and employees will not be liable for any loss or damage sustained by any person acting in reliance on the information contained on this article. FMD Group Pty Ltd ABN 99 103 115 591 trading as FMD Financial is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977. The FMD advisers are Authorised Representatives of FMD Advisory Services Pty Ltd AFSL 232977. Rev Invest Pty Ltd is a Corporate Authorised Representative of FMD Advisory Services Pty Ltd AFSL 232977.