Page 96 - Smart Money

Chapter 4

If you close one super fund to go to another fund, know what you are
losing. In certain circumstances, if you have an insurance policy within
that fund, that policy would be cancelled upon roll-over, so you would
lose the cover and you may not get it again. Also, know the fee implications
if you are moving from one fund to another, or entering a new fund. Ask
if there is an exit fee, so that if in a year’s time you decide this is not the
fund for you, you are not going to get hit with a big fee on exit.

Know what you are signing. Superannuation is a 20-, 30-, 40-year
investment. If you are going to be stuck in a dud fund for 40 years,
unfortunately “I didn’t know” is not the best excuse. Just know what you
are signing before you go into it, and know the worst-case scenario. If you
speak to a planner, they will guide you in the right direction so you don’t
make a bad decision that you are stuck with for what could be decades.

One important thing to realise is that if you’ve got five super funds
because you have changed jobs five times, or you’ve just set up a bunch
of different super funds, you could be paying duplicate fees. It is not the
end of the world, but if you are paying administration costs of $100 once
that is bad enough. If you are paying that five times a year, it does eat into
your retirement savings. It is a saving that you could have; sometimes you
are saving by not spending.

Investments

In any investment strategy, your biggest assets are time and the ability to
leave those strategies to perform.

Also, in broad terms, basic diversification is important. The old clichés
are clichés for a reason – don’t put your eggs in one basket. Know that
markets run in cycles, and that comes back to your time frame. You don’t
want to sell an asset at the wrong time because you are forced to. If
you’ve got the time and you believe in the asset, give it the time to grow
and go through its natural cycle.

Your financial planner will prepare a statement of advice. It’s what we
used to call a financial plan. Engage a planner who has the capacity to