Page 94 - Smart Money

Chapter 4

The worst thing I see, and it still happens, is someone who is in their 60s
or within a year or two of their retirement, and they come to see me and
say, “Right, here is my superannuation,” and it is generally the first time
they have given it a serious look in many, many years. They have missed
out on a lot of opportunities just because they didn’t look at it until it
was too late.

The benefits of compounding returns and time are very much

underrated and overlooked by younger people because it is not
something they put a lot of thought into.

When you get your first job, say you are earning the minimum wage,
superannuation is mandatory. But most people at that age sign up to the
superannuation fund that their employer suggests. There is not a lot of
thought put into it, and over time, there is not a lot of money put into
it. At that level, basic funds do the job. The super payments need to go
somewhere, and as long as it is going to a legally compliant superannuation
fund, that is fine.

But at a certain age, and it is different for everyone, usually around the
mid-20s, people start to develop at least a certain amount of financial
literacy. That is when they should be looking at these sorts of things. Now,
that doesn’t mean they need a fund with all the bells and whistles, but
that is when they need to make sure that their money is moving in the
right direction and that it is invested in a way that they are comfortable
with.

A lot of funds are what we call basic retail funds or industry funds or
employer-sponsored funds, and you get what you pay for. They are low
cost, but there are not a lot of intricacies or options within them. A lot of
those funds have four or five or six investment options and you just pick
one and put the money in that. They don’t have a lot of other features or
things that you can add on, and if they do have insurance available, it is
usually quite limited.

9