We wax lyrical about superannuation being a ‘long-term’ investment, but are we barking up the wrong tree? Is the nature of superannuation and our description of it the very thing that’s preventing most of us from taking an interest early so we get maximum bang for our buck?
With all our messages about having the time to ride out the natural highs and lows of the market when it comes to super, are we bypassing the real message that the earlier you start to take an interest, the better?
The magical concept of compounding is simply not given enough airtime. This simple principle has provided wealth creating opportunity for many a millionaire and it’s a fundamental design feature of superannuation.
We’ve all heard the Westfield example …
“If you’d invested $1,000 in the float of Westfield Holdings in 1960 and reinvested every dividend, your investment would have been valued at $198 million by 2010.”
… not bad for an investment of just over $8,000 in today’s money.
Which leads me to research showing that more than 30% of Australians still believe retirement is too far away for them to plan for it – worrying indeed. Especially when you think about the 38% of Australians who know they should be planning for their retirement, but who simply don’t make it a priority as ‘other things always get in the way’.
Awareness and understanding is the key here and this can be achieved through educating super members on why super is important, how it works, and how they can take an active interest. Unpacking the jargon is critical and this is what we do best at Money101. We understand the importance of financial education in creating personal wellbeing and strive to find new and innovative ways to deliver important educational messages.