What to look for in a superannuation fund?
What to look for in a superannuation fund?
If you were looking at buying a car you would not go out & buy the cheapest car on the market.
Would you?
When we were looking at a new car last month, we went through a checklist or research before settling on the car;
How safe is the car?
As our family is growing, we wanted to ensure the new car we were purchasing was safe, not just for the driver, but for everyone in the car
How reliable the car is?
As with a growing young family, we don’t want the car to be unreliable & break down
Is it going to meet your needs?
Does it have enough seat-belts, does it have room for a pram, does it have leather seats to clean easily.
What is the cost efficiency of the car?
How much does it cost to run & how cost effective is it in the long run?
Is it fuel efficient?
Is it expensive to maintain?
Do you need to get the car serviced on a regular basis?
These are all things you would think long & hard about before going & buying a car.
Based on the research that goes into purchasing a car, why with your superannuation money would you just go & pick the cheapest?
Your superannuation fund will probably be one of your biggest & most valuable financial asset that you will ever own (that is including your family home).
When it comes to looking at a variety of different superannuation funds, often the cheapest is not always the best.
At Newcastle Advisors our Newcastle financial planners have 4 key requirements when it comes to selecting a quality superannuation fund;
Wide range of different investments
Not just managed funds & definitely not those pre-populated options, where you get typically 5 investment options such as - high growth, growth, balanced, conservative, & cash!
That is simply not good enough.
We look for super funds with a wide range of different managed funds from different fund managers. We don’t want to be forced to go with one particular fund manager.
In addition, we want to have access to a wide range of direct equities, a wide range of index based funds & ETFs.
Even if there is not a need for these investments today, as your super fund grows your appreciate for risk changes with your financial & retirement goals. Having a wide variety & range of investments provides you with choice & freedom to construct your portfolio to meet your needs (without having to change super funds & potentially pay capital gains tax).
Access to quality insurance
When researching super funds, we want to ensure that through your super you can take out personal insurance, including Life cover, TPD cover & income protection cover.
In addition, we don’t just want any type of income protection cover, we want to ensure it cover you to at least age 65.
There are other little nuances that we focus on when advising our clients, including have TPD Own occupation & having bells & whistles of an income protection policy attached to your insurance within your super fund.
However, in saying that, there is now an ability to obtain the most appropriate super fund & also obtain the most appropriate insurance policy for your particular circumstances. As these days you do not need to have the insurance that your super fund offers (there are ways around this).
Ability to transfer between super & pension accounts (inspecie transfer)
This is critically important & in our experience, can be most costly.
If your super fund does not have this facility or option, our Newcastle financial advisers would not even consider it.
Inspecie transfer service helps you avoid capital gains tax when you go to retire.
When you move your superannuation from accumulation phase (where you are receiving contributions) to pension phase (where you draw an income from your super in retirement).
It helps you avoid crystallising capital gains which can potentially save you a huge amount of money in the long run.
Cost effective
Once the super fund has ticked the first 3 requirements, then our Newcastle financial planners consider how cost effective the super account is.
Ideally your super funds costs should not be more than 0.90% per annum.
If you are paying more it may be time to review your super fund.
When it comes to looking at the “cheap” superannuation funds, don’t forget to “compare the pair” & look at all the fees.
Our Newcastle financial advisors recommend you do not just stop at the admin or member fees when completing your research, have a look at the investment management (MERs) fees, as some of the “cheap” funds are collecting a large proportion of their fees through “management fees”.
Therefore, when you review your superannuation accounts, ensure they meet these four requirements, if they don’t, began your research to find a super fund that does & ensure it meets your needs - just like you would when buying a car.
Alternatively, if this sounds like too much, contact our Newcastle Financial Advisors who can support you & do all the heavy lifting for you.
NEWCASTLE FINANCIAL PLANNING
Supporting with all of your financial advice across Newcastle, the Hunter, Central Coast & Sydney.
Visit our Newcastle Financial Planners at Level 1/142 Union St, The Junction NSW 2291.