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Is super a good investment

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 Is superannuation a good (or bad) investment?

Many people perceive superannuation as either a good or bad investment, however superannuation itself is not an investment but more a "tax effective investment vehicle" or structure for holding assets, rather than an asset class itself.


You cannot say that superannuation has poor performance, as performance can only be attributed to the underlying investments held by your superannuation. The performance will depend on whether your fund is invested into cash, bonds, property, Australian shares, international shares or a combination of all five.


Whatever investments you might acquire outside of superannuation you can, in most cases, also acquire within superannuation. Buying these investments within your super fund is like purchasing the investments through a tax haven, except that it is legal and encouraged by the government.


Because of the tax concessions, an investment within superannuation should actually outperform the exact same investment held outside of super. If the underlying investments are not performing well you should be proactive and consider changing those investments for something more suitable.


A superannuation investment strategy is usually a very long term proposition and in these cases, it pays to use the power of compounding by seeking growth investments, although the actual choice of investment is really up to you.


After the family home, superannuation represents the second largest financial resource for most people. Despite negative investment returns since the 2008-09 financial year and continuing market volatility, superannuation assets are projected to grow in real terms at about 4.3% pa to around $6.1 trillion in 2035 (or by $3.2 trillion in real terms). (Source: Treasury projection, Super System Review Final Report, 30 June 2010).


Superannuation is one of the most important investments of your lifetime and sadly for many people, also one of the most neglected.

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General Advice Warning: The information is general in nature and may not be relevant to your individual circumstances, you should not. therefore, rely or act on this information without first obtaining suitable professional advice. This site is intended for Australian residents only.