But for most self-employed folks, this is exactly what happens. You pay more tax. And end up with less money in retirement than if you’d been a traditional employee.
All because nobody made it clear how to grow your super investments, by conveniently slashing your tax using superannuation... So let's change that!
Are you ready for a truth bomb?
When it comes to your super, this is what you simply can’t control:
But, more importantly, here’s what you CAN control:
This after-tax focus on wealth is particularly important when you’re self-employed. Because you don’t want too much tax and high investment management fees potentially eating up a sizable chunk of your real returns.
If you’re not quite sure how to use super to legitimately reduce your tax, let’s fix that.
Because it’s actually a really useful strategy.
You see, money inside super is taxed at 15%, versus outside of super where it’s taxed at your marginal tax rate (which can be as high as 45%).
But if you want to claim a tax deduction on the money you contribute, it's important to keep in mind that it's actually not enough to simply make a Personal Contribution into your super. You have to do a few more things – which are outlined in detail in THIS blog post.
She’s a 34 year old freelance web designer who wants to retire at 67.
Alex earns a solid average of $85,000 a year. She also gets taxed solidly, too.
So she decides there must be better way to keep more of his hard earned money - so she commits to planting $500 a month of it in her super where her current balance is $0 (a result of many years of neglect).
Sp by saving for retirement using super, Alex cuts $44k in taxes and pockets an additional $102k in retirement savings.
Thank you Mr Taxman!
Once you’re paying less money in taxes, you’ve then got more inside your investments to keep compounding over the long term.
And stashing that money into low-cost, low-tax index funds – with a steady return – is a great way to build your retirement wealth.
No wonder the Barefoot Investor and Warren Buffett are always praising index funds*.
All the investment options in GigSuper are built using index funds. This means you won’t be paying fund managers unnecessarily hefty fees to try to outperform the market...because in the long run, that’s an extremely difficult task to pull off.
Another handy thing about index funds is their tendency to have a lower turnover of assets.
From a tax perspective, this typically leads to less capital gains tax being triggered. Which is great for keeping the Tax Man from binging on your investment returns as intensely as he’d like to.
*To be clear, they’re endorsing index funds, not GigSuper. If they do endorse us, you can bet we’ll let you know.
If you’re into making your super simple, automate everything using your GigSuper app.
Including your portfolio risk management.
Just choose the Autopilot option and we’ll move your money from more aggressive investments when you’re younger, to more conservative ones as you get older.
Prefer a more hands-on approach? That’s cool, too. Simply choose from one of our four diversified investment options and manage it yourself from within the app.
Join our pre-launch mailing list now to see how we’ve made it ridiculously easy to get your super on track.
These results are for illustrative purposes only and do not represent actual or expected returns that any particular investor might experience.
The projections are based on a number of assumptions, including but not limited to the following:
The prospective financial information provided is not a reliable indicator of future performance in that it is predictive in nature and may be affected by inaccurate assumptions, unknown risks and other uncertainties. Therefore, the prospective financial information may differ materially from the results ultimately achieved.
The above comparison in no way constitutes advice to invest in any particular investment product and we recommend you seek independent financial advice before deciding whether investing in super or non-super products is right for you.