Monday, September 26, 2011

My retirement fund returns suck

Last night the topic of superannuation retirement funds arose. Let me tell you that the topic of super doesn't come up very often at all. Infact, I can count on one hand the number of friends who have raised the topic of their superannuation fund with me. It's not that it's unimportant. Just that the idea of retirement is so far fetched and so far into the future.

Maybe in 35 years time we'll be having coffee together in our wizened age and spending 24/7 discussing our respective super funds but until those days are here - I can safely say that it isn't at the forefront of our mind.

So I sat with my friend(G) calculating our superannuation contributions. We started off with our balance on 30/06/08 because that's the extent of the online data available:

1. Balance at 30/06/08
2. Plus compulsory employer contributions
3. Plus extra personal contributions
4. Compare that total to what the total of our fund was last night

Basically it is comparing the idea that if we could take that money out on 30/06/08 and let it sit under the mattress and add the extra that the employers and we ourselves have contributed to it. Literally assuming that we do nothing with that money for three years AND then compare that to what the result was after the super fund did some not-so-awesome trading with our funds.

The result? Enough to bring tears to our eyes. All I can say is thank heavens we're not going to need our retirement fund anytime soon >.<  G's retirement fund is invested into Australian + international shares. Mine is invested into the Core Strategy Fund which is a mix of Aussie+international stocks/bonds/property/cash etc.

Across the past three years, the average return of my retirement fund is ONLY 1.49% per annum. It's so lousy. I get exceedingly better returns on my investments and savings with my eyes closed. Sheesh. G's fund had a fantastic average three year return of around -2.22% per annum (oh alright, sarcasm is the lowest form of wit :/ ).  Unfortunately not much we can do about it since super is compulsory and we can't touch it until we're in our 60s at least.

You can betcha that the moment our super funds hit critical mass, we're going to go for the SMSF option. Manage the thing ourself. Either that or we can ignore our super funds at our own peril.

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