Don't Panic When Planning Self Managed Super Funds
Monday November 3, 2008
A state of panic is the worst state to be in when planning investments for self managed super funds or any other types of super funds. While seeing your superannuation fund go down in value can be extremely worrying, you must take into account the occasional possibility of making losses on your investments. While some investments, such as high interest savings accounts, may generally be quite stable in providing returns, investing money from managed super funds in savings accounts is often a reactionary tactic that can leave you with less money in the long run.
Choosing self managed super funds over industry super funds or master trusts relies on your knowledge of how a super fund works to make you money over time. All super funds expect there to be occasional years when they will post a negative return. When running self managed super funds, you should take this into account as well in order to plan for a level of extra payments into your super fund to help to cancel out long term losses.
A good step to take before establishing self managed super funds is to plan the amount you will need to have a comfortable retirement. This will vary from person to person, as a realistic retirement sum on one salary will not be the same as on another. By working out this sum and coming up with a realistic level of average yearly returns, you can decide the extra payments to make into your self managed super funds. You will then need to regularly review your progress. If you experience a loss in one year, but are still on track to make enough for retirement, you may simply have experienced a poor year. If you are regularly making losses and cannot meet you retirement goals at this rate, you may want to consider a different investment strategy, different types of super funds, or you may have unrealistic expectations of the retirement lifestyle you can afford.
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