Why Checking Your Retirement Investment Account is Important
At the end of 2016 I started to look at a few aspects of my life and to try and find out where I was spending my money. I found I was spending too much money on my mobile phone plan and I cut that back quite a bit. It turned out I could get a way better deal for a lot less money too, you just have to search. But I didn’t stop there, I thought, what about my retirement account? How much am I paying for someone to manage this.
I am new to the work force so I just decided to go with the work supplied Supperannuaction account (Retirement Account), and I thought that work had done the research on the company and decided that is the best Super (Retirement Account) for everyone employed.
After a disappointing financial year of 2015/2016, I realised that the amount of money the Super company made me, was eventually chewed up in fees and then some. So overall, I lost money in my Super account, now that doesn’t sit well for me.
Knowing this information, I decided to do some research myself to find what Super best fit me. Spoiler alert, it wasn’t the Super company that my employer set me up with.
Luckily, here in Australia we have some great websites where you can compare Super accounts and see what suits you. I used the websites Canstar and RateCity.
What I found were the fees were too high for admin fees and then also the commission they took for heir “investment knowledge” was too high for my liking. I found it odd that they would charge a commission for investments when I am the one who chooses where the funds actually go. Oh well.
Figure 1: Existing Superannuation Account – Source: RateCity
As you can see the fees are still lower than the industry average but I knew after my research that I could get it even cheaper. So this is where I did my research and I found the company I liked.
Figure 2: My New Super Account – Source: RateCity
As you can see by the graphs they are similar companies in the fact that they offer a similar investment results, although the fees are a lot less than the first company, by comparison.
So lets do the math to figure out how this would change my overall retirement account. To simplify this, I will use a table. I have made some assumptions in this table, they are; I will be working for 40 years, my wage will increase by 2.5% per year.
Table 1: Super Comparison
While the differences are still pretty small this does still add up. The total of money in that retirement account is a little under $400k. If the retirement account was 1 million dollars the difference would be $3520 difference at retirement time.
This isn’t a lot of money in the whole scheme of things, I know, but why give some company your money when this is really your money. Don’t let the companies take your hard earned retirement through fees.
Remember that this is per year at the beginning of your retirement. So if they are even taking 2-3k a year, that is money that you could be spending instead. I would much rather have the money myself than some company, that’s for sure.
How do you invest your retirement accounts?