Super is Super Superior

Discussion in 'Economics' started by onizuka, May 16, 2007.

  1. onizuka


    1. After the federal government announcement of new superannuation standard, economists believe it will provoke a new saving pattern.
    2. Survey says Super is a good way to save.
    3. People become aggressive in revising their super situation.

    CONSOLIDATED ASSETS (Superannuation funds)
    Dec Qtr 2005 Jun Qtr 2006 Dec Qtr 2006
    496 733 $m 545 961$m 596 518 $m
    Source from ABS (Dec 2006)

    At 31 December 2006, consolidated assets of superannuation funds were $596.5b, up $50.6b (9.3%) on the revised September 2006 figure and up $99.8b (20%) on the revised December 2005 figure.

    "The changes we have made in this year's budget makes superannuation a terrific savings vehicle for all Australians - that's the message I would like all Australians to get, particularly younger Australians," Treasurer Peter Costello said.

    The Association of Superannuation Funds of Australia (ASFA) commissioned ANOP to carry out the research in September of this year, among 750 working Australians aged between 25 and 69.

    The researchers invited respondents to compare super with other ways of preparing financially for retirement - 87% saw super as a good way to save. Saving through super emerged neck and neck with buying investment property - 44% of respondents said they would rather save through super, with 45% opting for investment property.

    “These are highly positive steps to reform super, and will increase workers’ engagement with one of their most significant investments,” said Dr Michaela Anderson, Director of Policy & Research at ASFA.

    ANZ financial planner Mike Cullen says the Government's plans to simplify the system are creating a more positive attitude towards super among older Australians.

    "The numbers of people that are coming in and wanting to talk about super has already increased, and increased dramatically,'' he said.

    We all know that tax advantage (15% compare to 46.5% marginal rate) is the benefit of superannuation over other forms of investments. Even there is no new super reform; super is still a good way to save.

    With the new rule, all of us should make the most out of it, especially for those aged more than 50.

    People aged less than 60 should wait to withdrawal super (if not urgently need money), because after 1 July 2007, it will be tax free to withdrawal super either partially or in full for people aged more than 60.

    Australia property markets are Mum and Dad market; they are about 50, rational investors should think about selling their negatively geared investment properties, putting the proceeds into super and then withdrawal the super tax-free when they are 60, in addition until July, Australians over the age of 55 will be allowed to put up to $1 million into super without incurring tax. After July 1 that amount will be limited to $150,000.

    Choose a good super company is as important as super itself, because they provide a better return and speed up your retirement goals quicker, however, short term performance is not the only factor to judge a super company good or bad, you should take into account of fees, life insurance and average long term performance.

    On the other hand, it may be more profitable for you to pay out you credit cards, loans and mortgages, and put the money into education savings for kids first rather than put the money into super, because loans are charged higher interest than the average return of super funds, and once the money is in the super, you can only withdrawal them when you retire.

    Finally, if you ignore super, you are not a smart investor. If you are towards 60, you should pay more attention on super, because the decisions you make now have strong impacts on how much you have when you retire.