Superannuation in Australia is a form of investment. Some believe that it is just a single asset but in reality, a super is composed of several asset classes where you’ll find your investment options. We’re talking about your hard-earned money, so it only makes sense to check your super’s performance. By knowing ways to judge your super fund’s performance, you’ll be able to assess and decide if you need to make some adjustments to ensure better returns.
The performance of your super changes every year. While it will grow for the long term, you may see low and/or negative returns. So how can you judge your super fund’s performance?
Here are some ways to judge your super fund’s performance:
- Performance of your super can be hard to determine, but try to look for a reasonable one. For instance, there’s no use choosing the top performer for next year just by looking at the data from the previous year.
- Check figures from the last five years. It’s not that useful to check the super’s performance from the last 12 months. This is a long-term investment, so it’s better to check the performance for a longer duration. Bear in mind that the performance of your super from the previous years will not guarantee the same performance in the coming years.
- The performance of your super is affected by the investment options available as well as their risk profile. Also, it will have an impact to your final balance of your superannuation and how much your money will be upon retirement.
- Use a superannuation calculator. This tool is commonly used to know how much money is needed for your super fund. Bear in mind, however, that this should only be treated as a guide. Since there are several factors that affect the performance of your super, the superannuation calculator can only provide estimated figures.
- Compare similar existing investment options. For instance, make sure to compare similar funds, instead of comparing cash investment options with international shares. Look at where the fund is invested in. Don’t compare the performance in shares versus performance in cash and fixed interest.
- Use the same period for each fund, or same start and finish dates. For instance, the performance of your fund for the last five years from January to January is not the same as the performance from April to April.
Do you have other ideas on how to judge your superannuation in Australia? Share your insights in the comments section.