Example:
I have $60,000 in super. $50,000 in super contributions, and $10,000 from investment growth. If the market falls dramatically, obviously that $10,000 will shrink.
But if one were to move that $60,000 to a new super account/fund, will that transfer the $60,000 and lock in the $10,000 in investments? Or will the $10,000 remain as fluid investments?
Your contributions and investment gains are now one big parcel of funds in your account and the total amount subject to the funds investment performance
If the market falls dramatically, obviously that $10,000 will shrink
Your super contributions can also shrink
How? Aren't they government guaranteed?
You can't be serious…
How? Aren't they government guaranteed?
No. They are not government guaranteed.
Um, might want to check that.
Your $60,000 will now shrink as the entirity is invested.
If the market falls say by 30% you will see your $60,000 turn into $42,000.
It's not like a dividend where you can take it and set it aside/withdraw it.
If you want to lock in the $10,000 you can do a percentage split of your super into cash (say 15% cash while 85% is in growth), but this would only make sense if you were doing it within the same super fund. No point in being with 2 super funds due to fees charged.
Think of your super as a unit trust as that is exactly what a super fund essentially is.
Each time you make a contribution, you purchase units in the funds strategy. So if you have your fund set to a balanced portfolio, then you will buy units in that portfolio, similar if you have a high growth option as default, you will purchase those units.
As the portfolio increases/decreases, your units stay the same, just the valuation is adjusted.
Swapping between these different portfolios, you are essentially disposing of those units and purchasing new ones. Which will lead to capital gain/losses. Its essentially all behind the scenes as you will never see a tax return for your individual super fund. But it is calculated in regards to the your member balance.
Your $50k + $10k is simply $60k in your account assuming that $10k are all realised gains plus earnings like interest, and dividends allocations from the investments.
The simplest way to look at it is if the market moves the whole $60k moves (we don't know your asset allocations).
The fluid allocations comes down to your asset profile choice, some are fluid like cash, deposits some are less fluid like real estate investments., it all comes down to what you have chosen in the new fund.
The $10,000 will be realised gains, and/or mark to market gains, viz. unrealised gains
Sorry OP! I don't really have an answer for you. That said, I have been meaning to ask this other question relating to moving to another superannuation fund, so I am going to ask here. When is a good time to switch superannuation funds? I really want to move from my current superannuation provider to another industry super fund. Can I initiate this at any time or should I do this when stock market is low? My assumption here is that most superannuation funds invest in stocks, so when I move from one superannuation to another, the new superannuation fund will invest my funds (a.k.a buy shares). May be I am completely mistaken and there is no "good" time to change super. Thoughts?
There is no better time in terms of minimising sell/buy gains/loss.
What's more important is confirm the product you will be on. Too often I read people say omg Hostplus did worse than AMP or something, without realising it depends on their investment product.
The short answer is no, that's not how Super works. May I suggest you call your superannuation fund and have a chat to them, they will explain it to you.