Don’t Let Your Superannuation Slip Through Your Fingers

The financial companies would like you to believe superannuation is far too complicated for you to understand. Throw some fat fees their way and they’ll look after your best interests. Right!

It’s been said that life is merely a game of bluff. Take Britney Spears. She bluffed us with that virginal, goody-two-shoes, Justin wouldn’t melt in my mouth routine for years.

These days it’s financial companies that are playing the ultimate game of bluff. Each year Australians collectively pay them $6 billion in fees to manage our super. That’s six billion reasons they have to convince you that superannuation is far too complicated for a mere mortal like yourself to get your head around.

Beware the smooth-talker

Slick financial salesmen aren’t confined to Australia. The British Government is still paying out billions in compensation to consumers who were conned out of their savings.

In Chile, companies offered free toasters to anyone transferring their life savings. It doesn’t take a financial guru to explain that kitchen appliances and superannuation don’t mix.

It’s time to turn the tables on self-serving financial salesmen who, in many cases, are far more concerned with their commission than your retirement needs. Take some advice from Rage Against The Machine, and say, “I won’t do what you tell me”.

“It’s time to turn the tables on self-serving financial salesmen who, in many cases, are far more concerned with their commission than your retirement needs.”

Call their bluff

Even though I’m the Barefoot Investor, my nipples don’t stand to attention at the sight of a super statement, but there is something undeniably sexy about calling the bluff of an industry that is blissfully happy to keep charging us as much as it can to manage our money.

You do have a choice

While there’s no opt-out policy when it comes to super, recent legislation allows many to choose who manages our super.

Super Choice has received a lot of attention from the press, mainly because there are huge fees on the line. Enter, stage right, the biggest game of bluff in town.

Super Choice puts you in the driver’s seat – so let’s bypass the bluff, put the pedal to the metal and get your super sorted.

Controlling your balance

Despite what many fund managers will tell you, there are two factors you can control that determine your final super balance – the assets your fund invests in, and the fees you pay.

Pop quiz. Eminem is:

(a) a detox procedure
(b) kind of like a Smartie
(c) Slim Shady

For those of you who chose the final option, the bulk of your superannuation money should be in equities (also known as shares).

Don’t be sucked in with saucy tales of huge returns. With the exception of David Hasselhoff, no one is permanently at the top of their game, and the same goes for fund managers.

The other factor that determines your retirement balance is the fees your fund charges, and if you want Foxtel in retirement, the less you pay the better.

The two main choices (apart from self-managed accounts) are retail or industry funds. Retail funds are run by commercial concerns, like banks and big fund managers, whose profits go to shareholders. The profits, of course, come from the fees.

Industry funds are practically the same as retail funds except that they are run for the benefit of the members. Profits are forsaken for lower fees. Lower fees mean you’ll have more money in your fund generating a return for yourself, rather than paying fees that generate a return for the shareholders of a retail fund.

Take the time

Finally, take 10 minutes to round up your old accounts into the one fund. The difference this makes to your final balance may pay for a trip to Rio rather than the local RSL in retirement.

There will always be someone willing to bluff you, happy for you to keep believing that it’s easier to let others do your thinking for you.

Yet the longer you allow it to go on, the more it hurts – just ask those mothers who willingly bought their daughters all the Britney Spears merchandise a few years back, and now find they’re buying her latest celebrity endorsement – home pregnancy tests.

Tread your own path!