When it comes to super, many people don't realise that have a choice between investing their money in an industry super, retail super, or SMSF. Learn more!
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When it comes to superannuation, most of us just know that money magically disappears from our pay cheque and (hopefully) reappears one day in retirement… when we’ve got our feet up and sipping margaritas on the beach (...that’s what we’re manifesting at least).
Many Aussies stick with a super fund for longer than their marriage (scary but true) so it makes knowing what type of fund you’re with kind of a big deal.
Industry super funds are the OGs of the super world. These super funds are not-for-profit organisations, meaning any profits are reinvested into the fund. There are 21 industry super funds, which hold over 14 million Australian super accounts between them.
Back in the day, you had to work in a specific sector to join. Think: hospo, teaching or healthcare. They all had specific funds. But now the industry super funds will accept pretty much anyone with a payslip.
They’re usually the default fund your company signs you up to, and they’re pretty straightforward - you pick from a handful of pre-mixed options (balanced, conservative, growth) and you’re sorted…but that’s also the extent of your control.
Retail super funds are usually run by banks or financial institutions and are often for-profit organisations. There are 57 of these funds in Australia with $807 billion held.
These super funds usually offer more options than the industry funds, but it’s often still a curated menu.
Since Wrap/Platform super funds hit the scene, they’ve opened up a huge amount of choice and flexibility for investors.
It’s like getting the choice of an à la carte menu at a restaurant instead of chef’s choice with NO variations at all (yep, not even for your gluten-free friend).
With these retail funds, you get access to a huge range of investments. Think: shares, ETFs, managed funds all living under the super umbrella so you can mix and match to suit your needs.
These are suitable for investors who want more flexibility and control over their retirement investments.
Netwealth’s Super Accelerator Core allows you to choose from a wide range of managed funds, term deposits, ETFs and managed models in the one fund. SO it means you get the freedom to design something that feels personal, but you don’t need to go full DIY like an SMSF.
A self-managed super fund (SMSF) is a private super fund that you manage yourself.
This is the full DIY kit. You’re the trustee, the decision-maker and basically the CEO of your retirement nest egg. If you want to invest in property, you can. Collectible wine? Nobody can stop you. Rare Pokémon cards? You can…but maybe not the safest investment.
But with great power comes great paperwork. Yep, running an SMSF is time-consuming and comes with a heap of legal responsibilities.
In fact, SMSF trustees spend on average more than eight hours a month managing an SMSF (or 100 hours per year!).
As you can see, there’s no one-size-fits-all answer for which type of super fund to choose - it really depends on how much control you want over your retirement funds.
While some people want the simplicity of industry super, a growing number of Aussies are chasing the broader menu of retail funds or wraps so that they can control their own destiny.
Disclaimer:
The Information contained in this article is general information. It does not constitute legal, tax, credit or financial advice and is not tailored to an individual’s circumstances. You should consider your own personal circumstances and seek advice from your professional advisers before making any decisions that may impact your financial situation.
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