Understanding super shouldn't be complicated and time consuming. To help, we’ve simplified it for you here. Super. Solved.
There are a few things to consider when choosing the fund that's right for you so we've pulled together our top 5 things to think about.
Small differences in fees and costs can have a substantial impact on your savings when you retire.
- Investment options
Two questions you may ask yourself when choosing an investment option are:
- How hands on do I want to be with my superannuation?
- What level of risk would I be comfortable with?
To find out more information on considering risk, go to the 'Considering risk' tab.
- Investment performance
Superannuation offers good potential to grow your money over longer time periods. Since returns can rise and fall in shorter periods of time - sometimes in one day - it’s important to look at fund performance in the bigger picture.
It's also recommended that you not look at it in isolation - other factors such as fees, investment options and insurance benefits can all affect your account growth.
- Additional benefits
Combining superannuation with insurance means your insurance payments come straight out of your superannuation account.
Since premiums are paid with after-tax dollars, it could be more tax-effective than if you were to pay from your personal savings. And because superannuation funds often buy insurance in bulk, insurance can be cheaper for you when compared to direct coverage.
Combining the two also gives you one less bill to worry about paying and means the same people who help you look after your nest egg cover you for income, disablement and death.
So when choosing a fund, consider whether you'd like your superannuation and insurance under the one roof.
- Account access and customer service
For those who prefer to be more hands on with their superannuation, easy account access and customer service is crucial. For those who'd rather a 'set and forget' type approach, access and service are often things that aren't really missed… until they're needed.
So when choosing a superannuation fund, it's important to consider whether you can easily access your account and if a customer service team is available to you.
You should consider our Product Disclosure Statement. Please note this information does not constitute personal financial product advice, and you may wish to consult your financial adviser before making a decision about whether Virgin Superannuation fits your objectives, financial situation and needs.
One of the smartest ways to manage your super for the long term is to contribute to your super regularly. You can contribute in the following ways:
- Employer contributions
- Personal Voluntary contributions
- Salary Sacrifice
- Spousal contributions
- To find out more on each, look at the Building Your Super section
If you are self-employed
Self-employed people can choose whether or not they wish to have superannuation. However you may want to consider superannuation as a way of saving for your retirement.
In most cases, self-employed people can claim a full tax deduction on contributions made up to age 75. Directors who receive salary or wages are generally entitled to superannuation contributions from their employer, provided they meet the eligibility requirements.
If you are a contractor that is hired wholly or principally for your labour and you’re not free to engage other businesses to perform the work, your employer may be required to pay your superannuation contributions, regardless of whether or not an Australian business number (ABN) can be quoted.
Superannuation funds often give you a choice between investment options. When choosing, you may want to consider the level of risk you’d be comfortable with.
If an investment option carries a higher level of risk, it means you generally have the potential to see higher returns over the long term. In the short term, it's important to note that investment options with higher level of risk have a higher potential to experience negative returns.
The table below shows the investment risk and growth prospects that can be expected from each asset class over the long term.
There are different types of risk that can apply to superannuation funds, they are:
- Investment risk[?]<All investments have the potential for fluctuating returns. Generally, the higher the risk, the higher the return. However the higher the risk, the higher the probability is for a negative return.
- Market risk[?]<This includes universal factors such as economic cycles, government policy, interest rates and inflation. Changes in these factors may result in dramatic increases or decreases in market valuations.
- Currency risk [?]<The risk that movements in foreign currency will affect the domestic value of overseas investments.
- Legislative risk [?]<Changes in legislation (such as superannuation and taxation laws) may affect your investment.
- Fund risk [?]<The risk of your fund terminating.
- Liquidity risk[?]<The extent to which investments can be converted into cash or other liquid securities without suffering a substantial reduction in value. This risk may arise in circumstances where in order to liquidate an asset quickly, it may be necessary to sell that asset at a substantial discount and so have a negative impact on the overall performance of the investment.
When deciding on an investment option, it might be helpful to understand the different levels of risk and returns associated with the different asset classes.
Some assets carry a higher level of investment risk than others - these are known as growth assets (e.g. shares and property). Those that are more stable are called defensive assets (e.g. cash and fixed interest).[?]<Deposits in a bank, short-term loan securities and other similar investments. Considered low risk with a corresponding expectation of low returns. [?]<Usually a loan to a government or business where a fixed rate and loan length are agreed to in advance. Moderate risk investment. Generally less risky than property and shares over the short term, but also expected to provide a lower level of return over a longer period. [?]<An investment in property or developments, either directly or through property trusts. Moderate to high risk investment, due to reliance on economic factors, location and quality. Has a corresponding level of moderate to high expected returns. [?]<Investments in overseas companies. Similar to Australian shares. Generally the expected return is high over the long term, but the risk is greater.
By spreading your investment among different asset classes (also known as diversification), you may be able to reduce the overall level of risk in your portfolio.
Generally, it's not possible to diversify all risk but spreading your investment over a mix of assets may help smooth out the ups and downs of an investment.
You may have heard that your super can be a tax effective way of saving for your retirement. That’s because any Employer contributions (SG’s) and any Salary Sacrifice contributions you make are generally taxed at a lower rate than your normal income. These are called concessional contributions and are taxed at a rate of 15% for contributions up to $30,000 per person per year for the 2015/2016 financial year (subject to indexation in future years), or $35,000 if aged at least 59 years on 30 June 2013. The higher cap will also apply in 2015/2016 for individuals aged at least 49 years on 30 June 2015.
Being protected is important, that’s why with Virgin Super we offer a range of insurance benefits. Through Virgin Super you can take advantage of:
- Automatic Insurance Cover* - pre-approved Death & Total and Permanent Disablement (TPD) insurance (on an opt-out basis) based on your age.
- Tailored Insurance cover - choose what level and type of cover you’d like to apply for:
- Death only, or
- Death and TPD cover, and/or
- Income Protection cover.
We’ve just given you a snapshot here, but you can find full and detailed information about our Insurance options within the Insurance Guide.
Units are the mechanism we use to work out how much your superannuation is worth.
When you invest in Virgin Super, you don’t buy actual assets - instead, the Trustee allocates you a number of units in the asset class or investment option your money goes into.
Your account balance is calculated by multiplying the number of units you have by the unit price (at any particular time). Your account balance will reflect that unit prices may fluctuate from day to day.
Each investment option has a different unit price, because they grow at different rates. Unit prices may fall as well as rise.
* Unit Price =
the total value of assets in the investment option less relevant fees, costs & taxes / the number of units issued in the investment options
Unit prices are calculated daily, based on the latest available market price.