- Published on 03 May 2018
- - Investment & Financial Advice
As with any financial decision, choosing a super fund to invest your retirement money takes thought and careful consideration. With the growing number of super funds available, choosing just one fund can not only be tricky but also quite daunting.
So how do you know if a super fund is the right fund for you? Well, if you’ve come across a fund or two that is of interest to you start by making a comparison. Listed below are some helpful tips and suggestions to assist you in comparing funds to make sure you choose the right super fund for you.
1. Start with your current super fund
Take a look at previous year’s statements and compare investment returns, fees that were charged to you, as well as contributions that were made.This will give you a general idea of what the fund looks like, how it’s performing, and will give you a foundation to compare against other funds.
2. Check what the superannuation rating agencies are saying
Check the ratings on a fund you’re planning to join against other high ranking funds to give you an understanding of the high performers in the marketplace.The three main super rating agencies are: Selecting Super, Chant West and Super Ratings.
3. Read the Product Disclosure Statement (PDS)
Every fund must provide you with a PDS before you join the fund.Request a copy of a PDS from a fund that is of interest to you.The PDS will give you a break down on things such as fees, the cost of insurance, as well as the investment options available. All of which plays an important role when choosing a super fund. All funds have a copy of their PDS generally available for download. You may need a specific address to find the PDS in the event you are in a large Corporate fund. A call to your fund will help you find the relevant document.
4. Check long-term investment performance
Investment performance can be a good indicator of how a fund is performing.If you’ve made a list of potential funds you want to join, compare how other superannuation investments of a similar type are performing.You also want to check to see if your investment choice if performing poorly due to the market suffering or if it’s worse than the industry average.
Remember that past performance is not an indicator of future performance.
5. Check what fees are associated
Fees are just one of the reasons why many people choose to change funds.People often find themselves paying significantly higher super fees and feel they are not getting anything in return.When comparing funds, check to see what fees will be charged to you. These will include, but are not limited to member fees, administration fees, contribution fees and investment fees.Consult the fund’s PDS for a list of fees charged.
Some funds would have you believe they are cheaper. Some industry funds are quite expensive. Particularly where you have larger balances. It is important to get the facts on costs and a call to your fund may be appropriate.
Not all funds charge a fixed % fee. Some funds reduce the fee as your balance grows making the overall fund more appealing.
6. Insurance cover
If you’re planning on taking up insurance cover inside super consider getting a pre-assessment done to see if you would be eligible to obtain insurance cover.If you have a pre-existing medical condition you may not be eligible for insurance. You should also have a quote drafted up to see what your premium amount will look like.
Many funds offer automatic acceptance. This means they will provide you with a level of cover (Genreally Death & Total & Permanent Disability and sometimes, Income Protection) without you having to provide medical evidence. These insurances are often referred to as Group Insurance.
Not all insurance is created equal either. Generally, industry funds offer cover that is based on a cost per unit. As you get older the cover per unit reduces which in turn means your cover reduces. This may not be in your best interests and should be taken into account when looking at this aspect of comparing the offerings of Superannuation funds.
7. Consult a financial adviser
When in doubt, seek financial advice.A professional licensed financial adviser can help you make the right decision that is tailored to your personal circumstances.They will ensure your money is invested safely and securely and will help you reach retirement goals. Financial advisers hold a sea of information when it comes to superannuation, so why not consider meeting with one.
LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist you. Anthony Stedman and Adam Watts both hold specialist accreditations with SPAA as specialist Self-Managed Superannuation planners.
Would you like to discuss your personal position further with one of our highly qualified financial planners? Why not call us today on 03 9596-7733.
There is no cost or obligation for our initial conversation/meeting.
Written by Adam Watts of LifeTime Financial Group. A leading privately owned Melbourne based Financial Planning practice.