Six ways to turbocharge your super

SMSF technical expert and columnist for The Australian newspaper
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Have you ever wondered how you can turbo charge your super? That is, give it a real kick along without too much effort. There are lots of different ways this can be done, and I’ve come up with a few things you should be across when trying to grow your DIY super.

Most of my ideas are not so much about contributing, but more about being an ultra-savvy investor.

Up front, I’ll admit it – none of my ideas are rocket science. And I reckon that’s a key to turbocharging your super. There’s probably no one in Australia who couldn’t possibly manage their money better if they really focused in on basic principles and commonsense.

You might have your own ideas about making the super system work better and I’d be delighted to hear any feedback you might have! You can contact me using the box at the bottom of this page.

Here’s some things you should think about:

One

Time and patience. Very few people make money quickly (and those who do often find it very hard to hold onto their newfound wealth). If you’re still young, then save as much as you possibly can. This is one of the best ways to turbocharge your super because the earlier you start to save, the longer you give the power of compound interest to do its job.

But what about those who don’t have as long an investment timeframe? Look at it this way; many of us are living longer lives due to safer working conditions and better health care. This means a person who retires at age 60 today may be staring down the barrel of at least 30 years of not working. So in reality, you’ve still got time on your side when you’re in your 60s.

Two

Know and use your eligible tax concessions and benefits because savings such as these can make a huge difference to your super balance over the years. There are some wonderful tax concessions and benefits available in super and you need to make sure you understand them all. For example, you can claim a tax deduction on most super contributions, while capital gains tax exemptions are available for the sale proceeds of a small business contributed to super. Those on modest wages should also take advantage of the Government Co-contribution, which, depending on your income, will match the amount you put into your super by up to $1,000. You could also be eligible for a tax concession if you put money into your spouse’s super and they meet the ATO’s requirements.

Three

Keep your fees low. Little savings here and there can add up over the years, especially when you consider the investment gains and interest on that money. In my view, the fees charged on the average super account are way too high. Demand a discount from your super fund, your fund managers, financial advisers, auditors and stockbrokers. Think of it this way: every extra dollar you pay in fees makes for a smaller income when you retire.

Four

Manage your super withdrawals. If you’re retired or approaching retirement, then you really need to make sure you understand how to best pay yourself a retirement income to make sure your money lasts. If you’re nearing retirement, you may want to consider a transition to retirement strategy (read Paul Rickard’s column, How Transition to Retirement boosts your super). You also make sure you understand all your Centrelink entitlements and how they work.

Five

Avoiding yesterday’s dog fund manager or stock may not be a good strategy. This year’s dog investment is often next year’s star performer. It takes real guts not to invest with the madding crowd. Keep up-to-date with stock recommendations (read our weekly tips from Charlie Aitken, Matthew Kidman and Rudi Filapek-Vandyck). And remember, the quicker something has increased in price, the harder it will fall.

Six

Don’t be greedy. My mum often used to say, “A fool and his money are easily parted”. Avoid unnecessary losses to your super by steering clear of ‘quick fixes’. Super is big business in Australia and many people want to get rich quickly, so there are a lot of shysters out there ready to steal your hard-earned retirement savings.

Stick by the old saying, “If sounds too good to be true it often is”. Don’t get caught out responding to spam emails, snail mail or unsolicited phone calls from so-called investment gurus or professionals.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

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