FINANCE 4 U - STEP 6



Let's talk retirement fund.


Future You will thank you for this.



A FEES


1. Have a copy of your superannuation statement or if you have a login, go to your account.


2. You need to source the Product Disclosure Statement (PDS) for the fund. The document is usually 15+ pages and in that wonderful document, you will find 2 main fees.


Google is your friend with this task - type in the Investment Company or Fund Name and PDS. An example MLC Business Super Growth PDS or REST Core Strategy PDS.




REST Super's explanation and calculator is not bad. Worth a look for some plain English explanation.


Another example is my MLC fund from work. The document is 142 pages! Here is the main part of the fees and an example of how much the fees are per year.


Below is an example of my MLC super account online. You can see all the transactions coming into your fund which is great. See if you can get online to your account and have a look around. Any questions, let me know, I would love to help you decipher.




3. Typically you will find these words (either do a search within the document or look in the contents page)

  • Investment Fee - this is the doozy and can range from 0.4% to 1.8% (on $100k, that could be between $400 - $1800 per year for the privilege of being in that fund! Over 20 years that could be $36,000 ++ as your portfolio grows. KNOW your FEE!). You normally do not see this fee as it is taken out of your 'returns' from your investment strategy before you see your profit.

  • Administration Fee - this is usually per super fund so this is where it's important to consolidate your super funds so you only pay for one. You normally see these fees on your statements (eg; above MLC screen dump)

If you can't find your fees, give me the challenge. DM or email me if you want me to help as I think this is so important. All I need is the fund name and if they say what investment you are in.


4. Barefoot Investor, Scott Pape and also Canna @sugarmamatv recommend a target of TOTAL fees to be no more than 0.8%. If more than that, you need to really reconsider which fund you are in or your fund should be returning you lots more than the average fund!

So for these 2 examples, with let's say $100,000 as your balance in Super, your fund could be deducting from $808 - $1316 per year. There is always a discussion that 'paying' for a Financial Planner is an expense, however, if they can save you in these types of fees AND perhaps review your Life/TPD insurances, you come out even AND get some really sound advice on tax strategies and questions for you to think about for your future self. I am getting carried away now. Pulling it back, let's just make sure you check your fees on your Super account/s and for every $100,000 your fee should be less than $800 per year. If not, call your super fund and discuss alternatives OR look at some industry funds.



B Investment


What is your money invested in? Is it in the default fund for your age?


There is a lot of debate about what risk profile you should be in. The younger you are the more aggressive your portfolio should be as you have time on your side to come back from the ups and downs of the market. In saying that, even at older stages (ie, 45+, your portfolio can still be geared towards the aggressive fund for at least 80% of your value).


Check what Investment Strategy (sometimes called Investment Options) you are in. Some examples are below.

Take note of the 'Standard Risk Measure'. The more a Growth Asset % the higher the potential return per year.


Hostplus has a good amount of information explaining the different Investment strategies and also how the risk plays a part - check it out here.



C Insurances


Life Insurance, TPD and Income Protection.


Check that you understand what Life and TPD you have in your super fund and also if it's on top of your super balance or within it. For example, if you have $300,000 as your TPD and your super balance is $220,000. Your TPD payout could be the 'difference' ($80,000) only as they take your super into consideration. The same goes for Life Insurance. It's good to know either way.


If you do have a hefty insurance premium within super, perhaps salary sacrificing some of the premium value each year would be valuable, to help offset the premium so it doesn't eat into your super fund. We had our insurances at $8,000 (couple) so we ensured we put at least $5,000 in to help with this cost. It reduced our taxable income and kept as much income as possible generated by the funds / shares that year. Over the years we have re-assessed what we need to have as an amount for Life Insurance as the older you get the premiums increase. As our loans have decreased, we have decreased our life insurance amount. This is another reason why it's important to do a check at least once a year.


Do you have a beneficiary registered? Super is separate to your will so you need to advise the super fund who you would like to leave your super to. Your Superfund may have an area on your login page to update this or give them a call.



D One SuperFund to rule them all


Combining ALL your super funds to keep fees down and also to have your money compounding together. Saves on admin fees too!


To find if you have any lost super, you can go to your MyGov account and following the prompts. Last year my partner found $1,800 that we didn't even know about!


I have recently found out that some funds have 'family' discounts! I am looking into one of these (Our Financial Planner sourced this option for us to look at).


Additional Resources I have found if you want to delve into some more information:


Okay, so to wrap up this step, let's get our super accounts in order and KNOW all the fees not just the 'admin fee' that is always displayed on your statement. This fee is the tip of the iceberg... Find out the 'real fees' related to your investment strategy. As always, I am here to help if I can and up for the challenge of finding the details online for you. Happy week getting to 'Know your Super'. 😊😊


#Finance4U #GenXFinance #ChooseFI #PersonalFinance #RetirementPlanning #FinancialPeace #FinancialLiteracy #FinancialFoundations


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