Superannuation

Choosing a Superannuation fund that’s right for you can be one of the hardest financial decisions to make. For many people it’s the largest investment they’ll ever be involved in, so it’s vital that you understand what variables there are and how to avoid being taken for a ride.

The problem is that there are just so many different options. Every employee is paid the same amount of compulsory super. That’s the easy part. It gets hard when you consider there are hundreds of different super funds to choose from, each with different investment processes, returns and fees.

It’s a hard area to navigate because there just isn’t that much good, clear information available. Most people find comparisons of Super funds too confusing and avoid it. Well SuperRatings has fixed this, releasing a complete list of Australia’s largest super funds and their performances over the past decade. The list should give you a pretty good benchmark by which you should compare your current super fund to see if you’re getting the most out of it.

The average return for and Australian balanced investment option for the 2009/10 financial year settled at 9.8%. While most funds saw actual return on investment at over 11%, fees brought the level down significantly. Considering the financial minefield we’ve been through this is not a bad outcome. Especially when you consider that return was negative 12.7% the year before. The rolling 10 year compound return has come down slightly to 4.5%.

If you’re in a balanced options fund, you should be pretty happy right now. Taking the low-risk option has definitely paid off over the past 3 years when returns plummeted. SuperRatings Managing Director Jeff Bresnahan says balanced option have done exactly what they’re supposed to do, “to prevent significant losses through diversification”. And unlike the poorly performing international share options, they’ll continue to be steady in the long term.