Sticking with an Industry or Retail Super Fund

Managing Your Super | Part 1

So you're thinking of managing your own self-managed super fund (SMSF)?

There are three options:

1. Don't do it at all - leave it with an industry or retail super fund.

2. Use a financial professional.

3. Do it yourself.

Let’s Discuss Option 1

There is nothing wrong with an industry super fund or a large retail-managed super fund. These days, they've spent millions of dollars on their websites to give you a ‘nice experience’. And because they spread their investments over several asset classes, the truth is, this is one of the safest and cheapest options for looking after your own superannuation fund.

If you leave your money in an industry or large retail super fund, you will find they will invest your money across five or six asset classes: things like cash, fixed interest, international equities, property exposures, and domestic equities. They will mix up those asset classes in different percentages to give you a range of investment exposures they will label aggressive, conservative, balanced, to the least risky exposure, which would be as much fixed interest or cash allocations as possible.

Source: Australian Super

On these big industry and retail super sites, you can now click and choose one of these asset allocation mixes to suit yourself.

To give you an example of how safe the big funds are relative to investing in equities alone, when the pandemic occurred and the equity markets fell about 30% in 35 days, most balanced funds fell around 8% because they weren't in 100% equities.

Of course, the flip side of that is that whilst you sleep at night without worrying about pandemics and precipitous moments, your returns are also somewhat dumbed down along with the risk. So, when the market recovered from the pandemic, your returns weren't that fantastic. You can’t have it both ways. Less downside, less upside.

So, big industry and retail super funds, where most Australians leave their superannuation, are pretty good stress-free solutions. You don't have to deal with the stock market, financial planners, accountants or do much in the way of admin. For those who do manage their own investments, they will tell you, there is nothing quite like an accountant asking you for a whole load of documents in the last week of the financial year just to bugger up your holiday.

If you are in one of the many Australian industry or retail super funds, you’ll need a login. If you don't know your login, what are you doing? Through these websites you can see everything they're doing on your behalf, there is full transparency, all the fees, and the performance. And there’s a feeling of comfort from seeing and being able to access that 24/7. This is the low-stress option.

And the price? You’re still paying fees, and your returns (and losses) are lower with less volatility.

So when it comes to thinking about managing your own self-managed super fund, the easiest, and possibly one of the cheapest and most stress-free options, is to give yourself a life and leave it in an industry or large retail super fund.

Hiring a financial professional can be expensive, but it offers peace of mind and security. Find out if it suits you: for Part 2, click here.