Is it worth putting money into super?
November 26, 2018
Even if you’re years away from retirement putting money into super now can have significant advantages.
Your money will earn compound interest
Put simply, compound interest is when you’re earning “interest on interest”. If your money is earning compound interest your savings will grow faster. In fact, it’s so good that ASIC MoneySmart describes compound interest like “double chocolate topping for your savings”. The beauty of compound interest in super is that it helps you grow your savings with minimal effort from you.
READ OUR ARTICLE ABOUT COMPOUND INTEREST
You could pay less tax
When you put money into super straight from your pre-tax pay (called a concessional contribution) your money is taxed at 15 per cent. That’s around half the tax that people earning $37,001 to $87,000 pay on their take home pay. Many people put money into super because of how tax effective it is. It’s such a good deal that limits apply as to how much money you can put into super as concessional contributions.
Government co-contribution
If you earn less than $52,697 in the current financial year and make one or more post-tax contributions to your super, you may be entitled to receive a co-contribution of up to $500 from the government. Saving a little now can add up to a more comfortable retirement in the future – and every dollar counts!
Diversification
The saying goes don’t keep all your eggs in one basket. The same goes with your investments. For instance, keeping all of your money in property might seem like a good idea but if there was a dip in the market you could find yourself coming up short at retirement time. Diversifying your investments minimises the risk of being in just one asset class. Putting money into super can be part of your wider wealth plan. TelstraSuper offers a range of diversified investment options – you can see where your super is invested in your online account.
Don’t have any spare cash?
If you don’t have any extra money to contribute there are still other steps you can take to help you get the most out of your super. Consider these three things: