3 factors to consider when investing your super

3 min read
HomeBlog3 factors to consider when investing your super
Superannuation is your money, which means you have the power to pick and choose which super fund you’re with, and how your money gets invested.
Here are 3 things to consider when evaluating where to invest your money:

1. Returns

Super is an investment that compounds over time. Compounding is where your money makes more money for you. It means that you receive growth, not only on your initial investment, but also on the prior growth added to your investment.
The key ingredient to compounding is time. And when it comes to superannuation, you could be investing for 40 years!
You can increase the benefits of compounding if you can get a higher rate of return. Investing has potentially higher returns than the interest you’d earn in a bank account.
Although investing has a greater level of risk compared to a bank account, the performance of different assets in super can vary significantly over time. The theory is that those assets with a greater level of risk generally perform better over the long term, compared to those with lower risk.1

2. Lower Fees

The majority of Australian superannuation money is actively invested. This means they employ fund managers to actively pick stocks to invest in. This can often lead to higher fees for the customer.
Professional Super invests in index funds, which doesn't require fund managers to pick stocks. They purchase the shares in proportion to their weighting in the market or segment, for example the ASX300. Less costs to the fund, means lower fees can be passed on to members.

3. Tax benefits

If you invest in shares on the stock exchange, your profits can attract Capital Gains Tax (CGT). This is a government tax that is applied to the income or earnings that you make on any investment.
The good news is, if you invest through your super, you’ll only pay 15% tax on your investments. If you bought them directly on the stock market, you’d pay CGT tax, which is generally the same as your income tax rate, which can be as high as 47%.

How can you get started?

Professional Super ticks all the boxes. Professional Super invests in index funds and has fee discounts for balances under $5,000. It can also help you easily invest through your super by making personal contributions. Find out more on how to join, it only takes a few minutes.
Want zero fees for super balances under $1,000?