By Anthony Bell, Finance Expert
Your superannuation is your safeguard for the future. But if your super has been decimated by the Global Financial Crisis, don’t panic. RESCU’s Finance Expert, Anthony Bell, has five simple strategies to get it back on track. It’s not sexy, but it’s worth spending five minutes reviewing this latest blog as it could save you thousands of dollars.
With markets having experienced the most significant downturn since the Great Depression, losing over 50% of their value, and with the greater part of the Australian population’s superannuation benefits invested in domestic and global share and property markets, it’s easy to see why the majority of our superannuation funds have seen such a loss in capital value.
Here are Anthony Bell’s simple steps to get your superannuation savings strategy back on track:
1. Don’t panic: It’s important to re-focus on the longer term plan and goals. During periods of high volatility in investment markets, it’s easy to be caught up in the short term events/environment and to potentially be emotionally driven to make the wrong investment decision. It’s important to understand where your capital is invested and what the characteristics are of those assets, are they fundamentally sound, and more importantly will the value return.
Generally stock markets will experience a period of negative returns every 6-10 years, this is why if you invest in shares you need to take a longer term approach.
2. Seek good advice: With all styles of investment, whether it be in property, shares or other, it is important to ensure that you have the right support mechanisms to achieve your goals and make educated/informed investment decisions.
Superannuation is merely a trust structure that can be utilised to invest and that provides valuable tax concessions. Whether you are new to investing or know what you are doing, sound advice can be the difference between success and failure.
3. Asset allocation and rebalancing your portfolio: You need to understand the underlying asset classes of your fund and then, it’s important to ensure that your capital is allocated across the different asset classes, e.g. cash, bonds, shares, property etc, in an appropriate way to achieve your desired return and not expose your capital to excess risk. How your capital is invested and what proportion is allocated to growth assets compared to more defensive assets, will have the largest impact on the performance of your superannuation assets going forward.
4. Review your contribution strategy: In times of negative returns, it’s understandable to consider stopping your additional contributions, when in actual fact it is often the best time to make additional contributions. This is the time you will be able to buy good quality assets at a discounted price. You will achieve a greater ‘bang for your buck’ when the markets you’re invested in recover.
Another opportunity could be to take advantage of the Government Co-Contribution, where for those individuals with a salary of less than $60,342pa who make additional after tax contributions to their superannuation fund, the Government will match this payment with an additional amount up to $1,000.
5. Review your existing funds fee structure: Fees will inevitably have an impact on the growth of our superannuation investments, some older style products that linger in the market will have higher fee structures compared to other similar more recently offered funds.
It’s important to ensure that you are receiving the value, options and flexibility you require for a reasonable cost… the old saying ‘you get what you pay for’ though rings true, cheap doesn’t always mean best.
For more information about your finances or to make an appointment with a specialist from Bell Partners, go to www.bellpartners.com
Congratulations to Bell Partners for winning the Business Weekly Review (BRW) Top 100 Accounting Firm for 2009, making that the seventh consecutive year running.
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