Not making regular contributions to super means your money misses out on “time in the market”. This generally slows down its growth and its ability to compound over time as well as it could.
For the most part, employees only care about the investment returns and performance of their super fund. And they can afford that luxury – because their employer handles the other major parts.
But when you’re self-employed and doing superannuation on your own – three things become equally important to give your nest egg the best chance to grow:
It’s this holistic member performance that’s crucial. Because if you ignore even one of the above, you could seriously disadvantage yourself.
...you're 3 times more likely to contribute to super when you're self-employed^.
In fact, 89% of GigSuper members have made a contribution to super in the last 12 month^.
And 83% of GigSuper members are claiming their contributions as a tax deduction.
To claim a tax deduction on the contributions you personally make to super requires manual work (see how GigSuper automates this process).
And you could be leaving a tip for the Tax Man if you don’t tell your fund that you wish to claim your super contributions as a tax deduction^^.
The other thing to note, is that most of the investments inside super are also available outside super. But the biggest difference is that:
Compounded over your working life – all of this that could be the difference between thousands upon thousands of dollars.
As an example, let's say this is Alex.
She's a 34 year old freelance copywriter who sees herself retiring at 67.
Alex earns a solid average of $85,000 a year and she also gets taxed solidly on that amount, too.
After years of procrastination, she finally decides to do something about her retirement and commits to saving $125 a week.
Very quickly, Alex notices how much less tax she pays if she starts saving inside super and claiming her contributions as a tax deduction.
She also sees how it boosts her retirement stash in the future, compared to the same investment outside of super:
So by saving for retirement using super – and claiming contributions as a tax deduction – Alex slashes her taxes and pockets an additional $81k in retirement savings.
And because Alex will be over 60 years old when she retires, she can access her superannuation savings tax-free.
Thank you Mr Taxman!
For more information on how super is taxed, visit the government’s MoneySmart website here.
Once your regular contributions are sorted, and you’re paying less money in taxes – you’ve then got more inside your investments to keep compounding over the long term.
And having it compound inside low-cost, low-tax index funds can be a great way to build your retirement wealth.
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.
No wonder Warren Buffett is always praising index funds**.
All the investment options in GigSuper are built using index funds.
And you’ll find 12 months worth of investment performance data – since our fund launched in December 2019 – below. These annual returns are for the periods 31 December 2019 to 31 December 2020.
You can check back regularly to stay in the know with our returns and performance information, as we update this data [[quarterly]]. You can also find more information inside our Investment Guide.
**Mr Buffet speaks about index funds in many places, including in The Little Book of Common Sense Investing by Jack Bogle. And just to be clear, Mr Buffet endorses index funds, not GigSuper. If he ever personally endorses us, you can bet we’ll let you know.
While the above data is interesting to mull over, there are several things to consider when deciding which GigSuper portfolio is the most suitable for you.
Everyone has a different appetite for risk, which can be influenced by age, aptitude, and experience. Some folks prefer to ride the wave of higher risk, while others are happier to play it more on the cautious side. That's why our portfolios cater to a range of risk profiles – from Conservative all the way to through to High Growth.
When you’ve got a longer investment timeframe (number of years you have left until you need to access your super PLUS the length of time you expect to draw down that retirement income), you might be more comfortable with taking on more risk, as the market will have many years to recover in the event of a dip in the market.
That’s why you’ll often hear folks in finance say that in the long-term, the market tends to go up, so a more aggressive option such as High Growth may be more attractive for an investor with a longer time frame until retirement.
On the other hand, a short timeframe in the market could easily see a downturn. In the event you need to sell your investments during a market downturn, you might be forced to accept lower (or negative) returns. Therefore investors with a shorter time frame until retirement may find a conservative investment option more attractive.
Alternatively GigSuper also offers an Autopilot investment option – which automatically reduces the risk profile of your investments as you get closer to retirement.
While we’ve tried to make investing across different risk classes as simple and clear as possible, everyone’s circumstances and personal tolerance for risk are very different. Which is why you should read and understand our Investment Guide, seek professional financial advice if you need to, or reach out to our Super Guide, Paul at firstname.lastname@example.org and he’ll be happy to help.
You can switch your investment portfolio anytime using the GigSuper platform – but please note that you can only make switches between the full investment portfolios (e.g. you can switch from Growth to Balanced). You have 2 free switches per calendar year, but will be charged $24.95 (inc GST) per switch thereafter.
GigSuper is a unitised fund. When you put your money into super via contributions and rollovers, that money buys you a certain number of units inside the investment portfolio you've chosen. Each of these units represent a share of the portfolio within your chosen investment option. As a result, each unit has a dollar value, or “unit price”.
This means that each contribution or rollover buys a certain number of units in your chosen investment option depending on the price at the time of investment. As the investments of each option can move either up or down in value, so does the unit price. The Fund calculates its unit prices weekly.
You can find more information on unit pricing in our Investment Guide.
Return of capital and the performance of your investment in the fund are not guaranteed. Past performance is not a reliable indicator of future performance.
Total returns are calculated:
*The above table of GigSuper’s investment options and performance statistics are indicative returns calculated on the exit unit prices since inception of each investment option, net of investment management fees and tax. Investment returns have been consolidated to include investment returns in GigSuper’s product in Grow Super SMA (ABN 20 543 903 424) which closed on 8 December 2020 and GigSuper’s current product offered through DIY Master Plan (ABN 46 074 281 314) which opened on 14 December 2020. Investment Options and underlying investment managers remain the same.
^ 89% of GigSuper’s members, who have had an account for at least 3 months, have made a personal contribution to super (calculated as at 22nd January 2021) in the last year, compared to only 25% of self-employed people (as estimated by the Retirement Income Review, 2020)
^^ This should not be considered as tax advice. If in doubt, talk to your tax accountant, professional adviser or visit the ATO website.