Ever since the Global Financial Crises (and before that for some people) I have had clients tell me that they do not like investing in super because it is a very risky investment. It is very easy to have this opinion of super funds given many have been forced to put back retirement plans by a few years to top up their super after the hefty losses of the past couple of years.
Some people prefer to invest in the property market. Some feel safer with having money sitting in the bank for a guaranteed interest rate return. Some like the higher potential returns given with investing in the share market, despite the risks involved!
However, Superannuation is not a risky investment!
Super is an investment vehicle, or a structure that you can invest within. This means that your superannuation money can be invested directly into the share market. It can be put towared purchasing investment properties, or your super money can be put into fixed interest bank accounts. It can also be spread through all these different investment options.
So why have so many people lost money within their super funds?
Most people set up their investment choices within the super fund and never look at it again. The super fund may be highly weighted towards owning shares and therefore with the crashes in the stock market that we have seen most superfunds have been negatively affected.
Why should you invest in super?
Investing within superannuation gives you access to highly beneficial tax rates! the maximum tax rate within your super fund is 15% compared with 46.5% for the individual tax rate. There are also other significant advantages to investing in super, as long as you are comfortable with what assets the funds are invested in within super.
I would encourage everyone to find out what their investment choices are currently within their super fund and get professional advice about where you should be investing.
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