It always surprises me when hear stories about people who have multiple superannuation accounts and they don't even have any clue how much money they have in each of their accounts.
Why is this important?
Imagine this: you start a job and your employer sets up a superannuation fund for you. They pay you 9.5% on top of your gross salary so at $70k that's $6,650 in a year. After a year you move on and now you're more switched on so you tell your new employer which superannuation fund to use.
Let's take a look at the superannuation fees according to Canstar:
So based on the above example you have been working for 2 years and accumulated a total of $13,300.
(To keep this calculation simple, we ignore many variables including the return that your fund has generated each day.)
The fees in your first account are $230 (taking the average here) but because you're awesome and you managed to find the cheapest superannuation fund, your annual fees on your second account are only $154. But hold on!
Because you have two accounts, your total fees are $384 (230+154), which is 2.9% of your combined superannuation balance.
At this point you might just shake your head a bit and then brush it off that it's really not that much.
Think again!
The annual Consumer Price Index (CPI) according to ABS (released on 25/01/2022) is 3.5% so the value of your money went down by 3.5% or $465.5. That means the value of your superannuation dropped by 6.4% or $849.5.
What do you do?
You just brush it off saying that
(a.) there is nothing you can do about the inflation.
(b.) your superannuation fund generated great returns.
You are correct about point a. but let's take a look at point b.
Last year was a massive year for the investors on both the property as well as the stock market. Many superannuation funds produced 13-18%.
Fantastic! You can pat yourself on the back because your superannuation fund generated, let's say, 15% less the 2.9% fees less 3.5% inflation. So in the end you became 8.6% wealthier.
Not so fast, mate!
If you just simply bought an ETF (Exchange Traded Fund that allows retail investors to trade complex products or a basket of stocks) that tracks the largest 500 US companies then you could have saved yourself hundreds on fees and you would have outperformed most of the superannuation funds. Big time!
For example, #SPYD (ETF that tracks the largest dividend stocks) achieved over 28% in 2021 and on top of that pays 4.75% dividends. I won't even cover the additional return that the covered call option strategy would have given you because you would not believe me.
Takeaway
Check your superannuation funds today and if you have in access of $100k (can be the sum of 4 trusted individuals) then I strongly encourage you to get upskilled in property and stock market investing and set up your self managed superannuation fund (#smsf). That would most likely allow you to produce far better results than your current superannuation fund.