Top 10 ways to build wealth in super

Superannuation is not an investment. Property, Australian and International companies, cash as well as bonds are investments. Superannuation is nothing more than a discounted tax structure for your investments so that you will have more money at retirement. Mandatory employer contributions may not be enough so here are our top 10 ways to build wealth in super.

1)    Make Salary Sacrifice Contributions

Nothing will boost your Superannuation more than making pre-tax contributions. The earlier you start making regular contributions and earlier you will see larger returns. This has a compounding effect which in turns boost your retirement savings allowing you to retire earlier or with more income. To see how much difference salary sacrificing could make to your Super check out the Salary Sacrifice Calculator

2)    Hold insurances outside of Super

Getting the right insurance cover can be the best financial decision you ever make and many people chose to hold their cover inside of super. The downside to this is unless you make additional contributions you will significantly reduce how much money you have at retirement. To learn more about insurance cover and your options check out my Top 10 considerations when it comes to Life insurance

3)    Make after tax contributions

In your lifetime you may receive a financial windfall such as an inheritance, profits from the sale of an asset such as property, gifted funds or an employment bonus. Unless there is an immediate need for these funds you should consider allocating money towards your retirement. An after tax contribution is a way of depositing amounts above the salary sacrifice contribution cap into Superannuation. There also after tax contribution caps so you should seek advice first from your Brisbane based financial planner. Contact us today to learn more.

4)    Take advantage of Government benefits

It is harder for some people to build money in super than others. If you have a higher salary you receive more employer contributions and if you have a lower salary you receive less employer contributions. To combat this the government offers co-contributions, up to a maximum amount of $500, to low or middle-income earners who make after tax contributions to their super. To receive these funds among other things you need to be employed as well as having the sum of your assessable income, total reportable fringe benefits and reportable employer super contributions $51,813 or less. Talk to your Brisbane based financial advisor to check your eligibility and how much you should contribute or Contact us today to learn more.

5)    Take advantage of Tax offsets

Unfortunately in families one parent may have more in Superannuation than the other. This is often because one partner took time off work to raise the children. In this situation working partners can make personal after-tax contributions to their spouse super and can claim a tax offset of up to $540. To be eligible, among other things, the sum of the spouse's assessable income, total reportable fringe benefits and reportable employer super contributions needs to be $13,800 or less. To check your eligibility talk to your local Brisbane accountant or click contact us today.

6)    Reduce your investment fees

The lowest fees and highest advertised returns should not be the deciding factor when it comes to choosing a Super fund. Having said that if you are comparing multiple funds and they all meet your needs it does make sense to go with the fund that is most price competitive. Too many people are paying for things they do not need, paying multiple fees and paying hidden fees. If too much of your money is being paid out in fees and commissions, then less money is invested producing investment returns. Extend this over multiple years and something that seemed insignificant such as multiple admin fees can end up costing you thousands. The most common way to reduce fees is to talk to your financial planner about super consolidation or Contact us today to book an appointment

7)    Reduce your insurance premiums

Like investment fees paying too much for insurance when held in super can make a big impact on your retirement savings. It is important to regularly review your insurances every two years to make sure you are not over-insured, your cover meets your needs and the insurer is still price competitive. To learn more check out my Top 10 things you need to know about Life Insurance

8)    Invest in Growth assets

Investments can be broken down into four main asset classes; Cash, Bonds, Property and Shares. Out of these four Property and Shares are known as growth assets because they are expected to produce a higher long term average returns. Cash and Bonds are known as defensive assets because they are lower risk in exchange for lower returns. To grow your super you need the right mix of growth and defensive assets in line with your tolerance to investment risk. Our Brisbane based Financial Planning firm completes risk profile assessments so we can recommend appropriate investments portfolios. To see what sort of Investment Style you have check out our Investment Style calculator or Contact us today to complete your risk profile assessment..

9)    Consolidate your Superannuation

Most people know it is a good idea to consolidate multiple superfunds and the number one reason to do so is to reduce fees. But did you know there are other risks with having more than one policy? Life happens, we move, change jobs, get married, have children and sometimes get divorced triggering the process all over again. Amongst all of that it is not surprising that the Super fund companies lose contact with their members. If the Super fund is unable to find their members and receive returned mail they may be obligated to close the account and pass the funds on to the Australian Tax Office for you to collect. It sounds great in theory but what happens if you the fund contained irreplaceable insurance cover? Or if the market boomed while your funds were sitting with the ATO instead of being invested? These are just some of the reasons why it is important to find lost super and keep your policies up to date. You can check and manage your super by creating a myGov account and linking to the ATO.

10)   Don’t think you will not ever see the benefit

Those approaching retirement wish they did something about their super years ago. Those still accumulating their wealth often discount super because they believe they will either pass away first, super wont exist or they will fund their retirement elsewhere. The government cannot take away your retirement savings. Diversifying your investments outside of super is a great idea but should not take away from the fact that super, due to its taxation benefits, is one of the best vehicles for your holistic retirement planning. People are also living longer and may spend more years in school and retirement than working. Using maths and statistics you can predict your life expectancy using our How long can I expect to live calculator

As a Brisbane Financial Advisor I can help you get clarity around your future, your options and the next steps to boost your super in plain English. Book an appointment today to learn more.

What you need to know

Constancy Wealth Management Pty Ltd ABN 51 168 427 361 trading as Constancy Wealth is an Authorised Representative and Credit Representative of AMP Financial Planning Pty Limited ABN 89 051 208 327 Australian Financial Services Licence 232706 and Australian Credit Licence 232706.

This information does not take your circumstances into account, so read the relevant disclosure documents and consider what’s right for you. If you acquire an AMP product or service, AMP companies and/or their representatives will receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details.

This checklist contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.