Is Now the Time to Invest in Superannuation?

With world markets having been in free fall for much of this year, you would be right to consider the best place to invest your money right and what to do with your superannuation. It pays to get sound financial advice on matters such as superannuation, insurance and planning for your retirement.

The latest GDP figures released by the Australian Bureau of Statistics in June confirm Australia is in a technical recession. This means there will be less money to go around and more people out of work. But whatever you can spare to invest in your super is worthwhile.

At the very least you should ensure you’ve only got the one super fund (and consolidate if not), make sure you’re not paying too much in fees and try to stick with your long-term strategy and not make panicked decisions.

Super experts agree that diversified portfolios (this is the case for most Australians) won’t experience significant impacts from the global downturn and volatility in financial markets in the long-term. But older Australians that plan to retire soon, and feel they may be over exposed, could consider moving to a more conservative strategy. However, moving to a more conservative strategy now, locks in a loss of capital and will deliver lower long-term returns. In short, a more conservative strategy is not likely to capture the benefits when the share markets inevitably recover.

Now could actually be considered an opportune time to be investing while we have a reasonable entry cost into the market and before the recovery starts in earnest.

The government allows you a capped concessional (tax deductible) amount of superannuation contributions in one year of up to $25,000 including any mandated contributions made (most notably employer super contributions) and any life insurance payments that are defined as superannuation contributions that you make.

Most of us do not have much left to contribute after mortgages, bills and general living expenses (unless of course you have made arrangements to salary sacrifice part of your income which is a very smart move). However any contribution you can find will help immensely going forward when compound interest is taken into account.

This compounding effect is one of the most important factors you can have working in your favour.

Also, it’s worth remembering that income protection premiums are also tax deductible in 99% of cases and can assist dramatically in reducing your taxable income.

If you do not have a financial adviser and would like further assistance with any questions, queries or even setting up an account for super, life cover or income protection please contact us.

We offer a free initial consult and are equipped to assist in any action you may require.

General Advice Warning: The content of this article is general advice only and should not be acted upon without first consulting an industry specialist as it does not take into consideration your personal needs, objectives or financial circumstances.


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