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Hi Team,

Thanks for participating in another great Team meeting last Thursday. My aim this year is to get you all more involved in the Team Meetings and help you with your own personal development. I really hope you start to use your "personal journal" to write down your thoughts and record your journey. Remember that "doing better" starts with you and can only be achieved if you have the right mindset and if you are open to learning new things.

This week I'm going to concentrate on superannuation, which put simply is "a system where money is placed into a specific savings fund to provide for a persons retirement". The big problem with this is that historically most people are really bad at saving for retirement. So, in 1992 the Keating government made superannuation contributions compulsory for all employees in Australia. This initiative has been a game changer for all employees and the total Australian superannuation fund is now the fourth largest pension fund in the world and is currently worth an estimated $2.7 trillion. Which accounts for 30% of Australia's total wealth.

Super funds are generally very broadly based investment funds, meaning they are spread across a broad and diverse range of investments, including Australian and international share indexes, property funds, Government bonds and cash. So they are very safe for the long term but return lower rates of growth compared to other investment funds. According to the ASFA (The Association of Superannuation Funds of Australia) the average annual return of all registered super funds over the last 5 years was 5.9% growth.

"Superannuation is like health. You must constantly invest in it if you want to have enough for your retirement",  Jeremy Hammond.

The biggest advantages of superannuation are the substantial tax benefits it offers. Firstly, you only pay 15% tax on all contributions and earnings in your super fund. Secondly, you can retire with $1.6 million in super and you won't pay any tax during your retirement (over 65 years old). Lastly, your super is protected if you go broke or bankrupt. However, other than modest growth returns, the biggest disadvantages of super funds are the high fees and hidden costs that some funds charge. According to The Barefoot Investor, "this industry skims $32 billion each year from our super funds" and " 90% of Australian's don't choose where their super contributions are invested and just end up with a default option."

You are going to have your money tied up in a super fund for a long time so it is important that you choose the right fund. Most financial advisers and commentators (including Scott Pape) speak very highly of the well know "industry funds" such as Cbus and Hostplus, which charge fairly low fees and offer solid long term returns. Super will be a significant part of your financial future, so make sure you fully understand it and do your homework before you commit to a specific super fund long term.

Thanks again for reading,
David