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AMP has shared with us this video that will talk you through how to grow your superannuation. You can watch the video here, or read the transcription below.
I’m Briony, I work at AMP. I’m going to talk about how to grow your super.
I was chatting to a girlfriend recently. She’s married and has two young children, and she asked me to look at her superannuation. So I did. We’re the same age but the difference was just enormous. So, together with my husband, who is a qualified financial planner, we thought we had to do something for my friend. What I’m most interested in is helping her to boost her super savings. We suggested five things for my friend. However, everyone is different. So you’ll need to consider your own circumstances and speak to a financial planner about how you can grow your super.
CONSOLIDATING YOUR SUPER CAN SAVE MONEY
So the first thing that we recommended was that she consolidate her super, which she had already done, so that was good. It means that she’s only paying one set of fees. The second way to achieve growth was to put her super with a fund that had lower fees and charges. She doesn’t want all the bells and whistles, and as she’s on maternity leave at the moment, she’s not having regular contributions going into her super. So we wanted to minimise the fees and charges being deducted from her account balance.
STRAYING FROM THE DEFAULT INVESTMENT PROFILE BRINGS RETURNS
Third, we suggested an investment profile that was more skewed towards growth. She’s not going to be able to access that money for the next 30 years, so why not set it to grow? Till now she’s just accepted whatever the superannuation default was on offer, and the default always tends to be something rather conservative. With an investment profile set to growth, she’ll see market prices go up and down, but when market prices drop she’ll have the advantages of dollar cost averaging. So if her 100 dollars was previously buying 100 units, she’ll now be buying 200 units, because the market price has dropped to 50 cents a unit.
SPOUSE CONTRIBUTIONS WITH TAX OFFSETS DURING MATERNITY LEAVE
Fourth, we talked to her about spouse contributions. Her husband could start making a post-tax contribution into her super accumulation, which builds up super balance. And he could claim a tax offset on up to $3,000 of those contributions.
Fifth, when she does get back into work, then I think she should consider catching up on her super with salary sacrifice. If she’s earning a reasonable income, she can enjoy significant tax savings by doing that. And she’s got another 30 or so years to really build that super balance.
Why should she bother with all this? Because I want her to retire comfortably. So I think, what are the stats? They say you need about 65 percent of your pre-retirement income in retirement. She can get to that point. Right up until she retires, she’ll have the opportunity to build.