Very simply, superannuation is a long-term investment that helps individuals save up for their retirement days. It allows you to grow your money by investing it over a period of time in a low-tax environment. Superannuation monies can be invested through a bank, or a super fund manager or you invest yourself through a self-managed fund.
The money invested has to stay in the fund until you reach retirement. The money may be redeemed after the investor reaches a certain age, between 55-65, depending on when they were born.
You can invest superannuation in assets like property, stock market, cash and other financial products. Diversification (spread between different funds and sectors) is considered a good thing. Some Australian superannuation funds also offer additional benefits like insurance coverage and disability insurance. With many managed funds or industry funds, life insurance, permanent disability cover, and income protection coverage is offered as a further incentive.
Australian superannuation is invested in more conservative funds traditionally, especially in today’s more volatile markets. A diversified portfolio are an ideal way to manage assets and secure your funds. Opting for the safe and ideal superannuation scheme allows investors to get the best returns with promise of a security for their investments.
There are many. In fact, Australia actively encourages people to invest in superannuation for their retirement by offering very attractive tax incentives. Taxes are lowered to 15% on contributions invested, and on withdrawals, they are tax-free up to $100,000 a year.
The only catch is there are limits on the contributions you can put into superannuation each year.
A lot of people are nervous about using the superannuation system, claiming the returns are low, and don’t trust the government. On top of that, you can’t get the money out until you are 60 as a rule.
However, superannuation is fantastically effective to help you build savings and wealth for your retirement. There is no other structure or mechanism in Australia that helps you build wealth in such a low tax environment. So if you have money or assets you don’t need to touch until you are 60, superannuation is definitely the place to put it!
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