Finding the right super fund can be difficult, particularly if you don’t know where to start.
Superannuation funds like REST Super have advantages and disadvantages that you should consider, when determining whether the fund is the right choice.
We’re going to look at some of the main traits of super funds in Australia and the factors you should consider when comparing superannuation funds, to make sure your nest egg performs as strongly as possible.
What is a superannuation fund?
A superannuation fund in an investment vehicle designed to help workers accumulate funds for their post-working life.
Employers are required by law to make contributions to the super fund you nominate – such as REST Super – which are pooled and invested by professionals with a view to increase the superannuation fund members’ wealth.
In many cases, super fund members are also permitted to make voluntary contributions to increase their balance.
Are there different types of superannuation funds?
There are several different types of super funds, and it’s important to be aware of this and the way these funds differ when comparing superannuation options for your future. The range of options includes:
- Industry funds – These are funds set up for professionals of a specific industry, although many are open for anyone to join. An example would be REST Super, which primarily caters for professionals in the retail sector. Industry super funds work on a not-for-profit basis, with an ultimate view to provide maximum returns for members.
- Retail funds – These superannuation funds work a little differently. Retail super funds are run by for-profit institutions such as banks. While they also aim to generate value for their members, retail super funds also aim to provide returns for their shareholders.
- Self-managed superannuation funds – With an SMSF, your money is in your own hands, and you make your investments directly, rather than having it sit as part of a professionally managed pooled fund. There are advantages and disadvantages to this investment strategy. While an SMSF might grant you access to a broader spectrum of investment options and the potential to lower your taxes, you also potentially expose your nest egg to significant market risk.
What factors should I consider when choosing a fund?
When you’re in the market for a super funds and comparing super fund options, it’s important to consider the following factors to make sure you’ve got the best choice possible:
- Performance – Super funds like REST Super are required to provide details on how investments made by the fund have performed over time. This can be useful when comparing super funds and finding which ones on average are providing the best returns, although previous performance should not be regarded as a guarantee of future success.
- Fees – Another factor to consider when comparing funds like REST Super is the fees you’re expected to pay as a member. Super funds generally have administration, account-keeping, investment and transfer fees, and these can add up and eat into your overall super balance. Make you are comfortable with the fees before signing up.
- Investment strategy – Different super funds take a different approach to investment. Some funds target aggressive, growth-driven investments that may risk short-term loss, with a view to maximise returns over the long term. Other funds might adopt a more conservative approach, to make sure member’s funds are protected in the event of a bad year. Funds can also take a balanced approach, with a mixture of those type of investments. When you’re comparing super funds it’s important to make sure the one you’re going with has an investment strategy that’s aligned with your plans and finance goals.
- Added extras – Many super funds have added extras to entice customers, and these services can make the difference when you’re comparing superannuation funds. A superannuation fund like REST Industry Super might offer a range of benefits like life insurance, income protection insurance and financial advice, and it’s important to consider the benefits of these services when determining which superannuation fund is the best for you.
Where can I get more information about super funds?
If you want more information about REST Super, or any other type of super fund, there is a range of avenues you can choose to inform you which one is the best choice for your situation:
- Comparison sites – Super comparison sites like RateCity provide a detailed rundown of the pros and cons of many funds, so you can compare super funds easily.
- Product disclosure statements (PDS) – These documents have crucial details about your fund, so it’s important to review them before signing the dotted line.
- The fund itself – It can also be useful to get the information from the horse’s mouth, so it’s an idea to check the super fund’s website, or even give the super fund a call.