the_gripmaster

I got my superannuation form to fill up and send it off. I recently moved in to Australia and this super thing was quite vague to me. I didn't really care about it until I started reading about it and I am taking this thing seriously now.

I am 28 and in a dilemma on which investment option to choose. I still have about 32 years before I reach the preservation age of 60.

I am stuck between choosing Option 1 (85% in shares or property, 15% in fixed interest and cash) and Option 2 (70% in shares or property, 30% in fixed interest and cash). Taking into consideration my age, I guess Option 1 is better. Is it?

Another question, I think it is a better idea to make personal after tax contributions to my super rather than keeping the money lying around in my bank account. What do you think?

(Bear with me for the naive questions, just asking about your opinions)

the_gripmaster

So, nobody really cares what is actually done with the 9% compulsory fraction taken off the salary to be put into super fund?

Wol

All I can say is set up a selfmanaged super fund, put 70% into an industry super fund and 30% into a high interest cash account. (But only if you have a substantial initial investment to make)

the_gripmaster

Thanks but I guess substantial means 100k or more which I don't have at the moment

Wol

Yes, a SMSF takes too great a proportion to manage with a relatively small capital.

But put into super what you can - the longer it's in the better!

fish.01

I would go the aggressive option at your age. I would also choose an industry fund rather than a master trust.

This article has some good tips: http://www.smartcompany.com.au/finan...per-funds.html

With regards to the after tax contributions I guess it depends whether you might have other needs for that money before you retire. It certainly reduces the temptation to spend it

the_gripmaster

I have chosen the aggressive option. Right now, I am sticking with the super fund which the employer chose (AMP Superleader) as I can't make the option of choosing my own.

EvannTel

If you an afford to lock away the money it may not be a bad idea. The kicker is ideally you want to do it BEFORE tax. It all depends on your income though.

If you are on $80K p.a. your tax rate is 30%. The maximum you can out into super is $25K
If co puts in 9% thats $7.2K so you can put in up to $18K in round numbers. You can do this before tax and all it will attract is 15% deposit tax (all super investments attract this flat rate).

Lets say you sacrifice $1K per month before tax, $850 will hit you super - you money. If you put it in after tax, $850 of credit you'll have to earn more - $214 more. No brainer in that respect.

If you are unsure get professional advice. With co schemes it usualuy free for questions like yours. Oh and at age 28 I'd go Option 1