Pricing In Superannuation

Fees and charges are an important factor when saving for your retirement.

One of the main reasons for setting up an SMSF, apart from control over assets, is to have transparency over fees charged.

For most things we buy we first look at the price we pay. Most of the time – unless you happen to be very well-off – your first question is: “how much is it going to cost me and what do I get for it?” And most of the time you want assurances that what you’re about to buy isn’t available for less money somewhere else. There’s nothing worse than finding out you’ve unnecessarily overpaid for something. That’s why we find the way some people invest their superannuation mesmerizing.

You see, when it comes to Superannuation – arguably one of the most important things you’ll ever do in your life – all too often that sound, prudent thinking suddenly goes out of the window. People who ordinarily hate overpaying for things suddenly become punters by just handing over all their Superannuation savings to a default Superannuation Fund (SMSF). They have no idea whatsoever what they invest in or if they’re overpaying for the service they receive. It’s like going to the first car dealer you see and buy the car they offer you without doing any research.

To make an assessment of how your superannuation fund performed over the last few years, compare your return against the relevant index:
•    If you were invested in shares and made a similar return to the ASX200 index – well done.
•    If you were invested in property and made a similar return to the property price increases – well done.
•    If you were invested in cash and made a similar return to the interest rates on offer – well done.

If your current superannuation fund invest you in the “Conservative Choice” or “Aggressive Option” and you don’t know what you are ACTUALLY invested in, you do not have control. If you want control, know what you invest in, know the risks involved, know the cost.

If a Fund tells you “It cost you a dollar a week to be invested in Super” it is not a true statement. There is a layer of SMSF fees involved that you can’t see. Look at the returns you achieved and compare these returns to what you expected to receive (see percentages above). You can then determine the true cost of your investment.

When the markets were ever increasing it was easy to hide high costs. If the share market returned 20% and it cost 5% in fees, you would have returned 15% and thought it to be OK. But if the makes returned only 2% for the year and costs remained at 5% a year, suddenly you go backwards with 3%. People look at their superannuation and ask questions. We welcome this scrutiny.

This “control of investments” is one of the reasons to set up your own superannuation fund. A big reason to go with Superannuation Warehouse as your administrator is the cost savings you can achieve. The less you have to pay in administration cost, the more can be retained in your Superannuation Fund. Looking at the SMSF costs to maintain your investments is as important as the investment returns generated. Having an expensive investment vehicle is like some one filling up a bucket with a hole in. No use adding a lot of water if it just leaks out.

We want you to WIN

At Superannuation Warehouse the philosophy is simple – if we can assist you in growing your Superannuation balance with the most efficient fee structure possible, while providing a professional service, we know you will remain as a client.

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