ING Living website:
http://www.ingdirect.com.au/super_and_retirement/super_and_r…
I got a few marketing emails from ING about their super fund product just around the time when I need to choose one for my new job. I was put with REST super by my previous employer and I was surprised at the fees they charged. So, this time round I have the chance to choose myself, but I know nothing on this kind of things. That's why I'm here, hoping to get some advice from fellow bargainers :)
I have just moved to ING after 5 years with HESTA. I became self employed 3 years ago and haven't put a cent in since, however I should be in a position to contribute some big lump sums soon and ING's fees for the share trading component were tiny compared to the shares option in HESTA.
HESTA basically has sucked performance - wise, with their cash options achieving about 2% vs after fees ING's 4.2% for the fee-free term deposit.
ING's insurance options were also better as HESTA reduces cover after age 36 (my current age) which is ridiculous as this when my mortgage is at its largest and children at their smallest.
I am no expert, I have only been in Australia 5 years and initially found the entire concept of Super really alien coming from the UK where you don't get any choice so don't need the knowledge.
Try to get into an industry fund - have a look at Australian Super.
I need to organise Super for the 1st time, and the preferred choice in a world of financial turmoil is RSA's (retirement savings account).
No fees, steady positive growth guaranteed, no risk as covered by Gov Guarantee, as example decent 2-year term deposit options are available at over 4% currently (variable).
Good example is: http://bankvic.com.au/interest-rates/superfuture-rsa 4.00%
http://www.defencebank.com.au/defence-banksuperassuredrsa 3.75% pa
Also ING looks good, 2Y TD 4.30% p.a.
Maybe Google "rsa bank account" for others. Ther's at least a dozen more including CBA.
Please note I'm just new to this and dont know how it works. But in the next 6 months will be biting the bullet. Or maybe buying vintage sportscar(s) instead.
Fees in super ARENT a bad thing. shock
Putting your super in very risk averse assets (eg TDs) at a young age (in super terms) IS a bad thing, especially if it is to avoid paying fees.
I'm 27 - have ~$50k in super and have it in 90% Aus Shares & 10% Property in an industry fund. Why would I want to touch a term deposit/cash option for super at this age, or even in 10-15 years time? I've got AT LEAST another 3 decades before I can touch a penny of it - the market will go up and down - but on the whole, there is more upside to be had over the longer term in other investments than in cash and TDs.
Eg. Compounding rates over 30 years - say 7% for equities, 4% for cash/TDs, 2.5% inflation to get a measure of time value of money.
$50k @ 7.0% = $380,612 over 30 years
$50k @ 4.0% = $162,169 over 30 years
$50 @ 2.5% = $104,878 over 30 years
This wouldnt be the case if you were nearing retirement… bringing it back to safer investments is of course a wiser idea.
Disclaimer: not financial advice, just a share of opinion.
Hi, tizey, I'm still in my early 20s and pretty much just starting out. In this case should I stick with my new employer's default choice Australian Super, which anna10 also suggested above? But I'm not sure what an industry fund is. Is it like I have to log in the fund's website and set what kind of fund I want and what kind of assets I want to invest my super in?
I would love to have more of your opinions :)
I cant say as to stick with your employers default fund or not - thats your decision to make (and also financial advice, which is not appropriate for a forum member to give IMO).
An industry fund is a super fund that is designated to be for the workers of a particular industry, and not ran for profit other than for the members. I never quite understood 'why' it is designated for workers of a particular industry when you consider what a super fund is there to do: provide for members retirement.
Does CBUS provide for retirement in any way different to Australian Super, or Care Super? I wouldnt have thought so (happy to be told otherwise as I dont know) - other than their investment performance. So in a way, its irrelevant what 'industry' they provide for - it comes down to investment returns and fees.
Alternative to an industry fund is a corporate fund - eg. Colonial Super, Perpetual Super, MLC, etc. These are still there to provide for members retirement, but generally have higher fees than industry funds because they are there to also generate an income for the company running it (Colonial, Perpetual, etc). The question is higher fees relative to higher returns? Not always, but can happen.
Once you're in a fund (or as part of the process in rolling over from another fund) is to select what investment mix you want - generally done as an initial % of your starting balance, and you also set a % split of any new contributions you receive into the fund to be allocated to. Generally you do this as part of the setup forms, and then can change it online if need be.
You'll hear terms like 'balanced' 'growth' 'stable' thrown around a lot, and also more direct options in some funds 'australian shares, international shares, international shares (hedged), property, cash, fixed interest' etc. These are all different investment options available, will have different risks/fees associated with them and of course different returns.
Some reading points to start.
http://www.industrysuper.com/
http://www.canstar.com.au/superannuation/
Thank you so much for the links and great answers. They really helped me understand super a lot more :)
Tizey your strategy is spot on, my point is that for all asset classes my previous super fund (which is a huge industry fund) both underperformed the benchmark (Australian shares underperformed the average of the All Ords, Cash option underperformed most term deposits etc etc) AND had higher fees than using the same asset classes via ING.
That's why I moved my super.
Low cost funds can still provide almost whatever combination of assets is appropriate for your circumstances.
ING is OK if you want to use their balanced option (50% Cash/50% Shares) and term deposits. That might be a little conservative for you if you're still young.
Australia Super, HostPlus and Sun Super are in my opinion the best options in terms of industry funds, primarily because they offer access to low-cost index funds. One thing with industry funds is they all charge a base fee of roughly $65-$100 p.a. and then typically low % fees for investment management. This doesn't seem like much but if you are starting out and have a small balance can be a fair amount as a % (e.g. if you have $6,500 then $65 is a 1% fee). So early on something like ING or Colonial can be better value, although if you don't want to move it for a long time and anticipate building the balance a fair bit over the next few years it probably balances out.
If you just want to put it in a single option without having to manually choose the precise allocation I compare all of the above in terms of fees and asset allocation on my blog here: http://superannuationfreak.blogspot.com.au/2013/07/the-best-…
If you want to customise a bit more, particularly for a mostly/all-shares allocation, Sun Super has a good balance between very low fees and sufficient diversification, though others also have good options: (another post covers these more options): http://superannuationfreak.blogspot.com.au/2013/07/the-best-…
Ideally you should read up on investment planning and asset allocation too, e.g. http://www.bogleheads.org/wiki/Asset_allocation
However if the goal is just to put it somewhere where you don't have to do too much thinking about it then one of the diversified options above should suit.
(I am not associated with any of the funds other than having super in some of them myself)
Thanks daffyd for your extra readings, nice blog btw :)
Although I have no specific advice to give on different funds I will say take everyone's advice with a pinch of super. Everyone's experience with certain funds can vary by a mile (I've found REST to be on the lower end of the fees), my only advice is whoever you pick base your options over what are you comfortable with (ie how much you can afford to lose). I'm always more cautious about my investments but that's just me :)