How super works

Why make investment choices in super when it’s easier to just get on with life?  
Here are three great reasons: 

1. Your super is a lot of money – unless you’re a champion at choosing to save money from your income, super is likely to grow into the biggest savings balance you’ll have in your lifetime. Why wouldn’t you make the most of it? 
   Expert tip:

“Want to get the hang of investing without the pressure? Super is the perfect sandbox for getting comfortable with investing when you don't have experience or spare savings to invest. Depending on your age you may be able to 'learn as you go' and get to understand what investment risks mean to you.”

2. Super funds make it easy to invest – super funds are required to have an investment strategy and make decisions they believe are in the best interests of their members. This means they do a lot of the work for you in coming up with investment options that suit your needs when it comes to taking risks and earning a decent return. It doesn’t mean there’s no risk and you can still lose your money though, so be sure to understand any investment decision before you make changes.

3. Compounding is the easiest money you’ll ever earn – Thanks to the magical multiplying effect of compounding, every extra dollar added to your super savings from your investments is another dollar that can earn you even more.

If retirement seems too far away, there could be another goal on your list your super savings can help with. You can’t put it towards a car or your next big trip overseas, but what if you could save faster for your new home through your super?

The First Home Super Saver Scheme (FHSSS) could see you on your way to owning your first home sooner:

• You can make extra payments into your super and keep them there until you’re ready to buy.
• While you do this you can be saving on tax – both on the money you’re earning from investing your super savings which is taxed at 15% and from the tax you could save by making extra payments into super from your pre-tax salary – these are called concessional or salary sacrificed contributions. Find out more about making extra super payments.

• Unlike a savings account which earns a fixed rate of interest, you can choose how to invest your super for a better return so your savings have the potential to grow faster. 

As we’ve seen during COVID-19, financial hardship can affect people for the most unexpected reasons. And during the early months of the pandemic, the Federal Government made it possible for people to withdraw their super if they had lost their income and didn’t have savings to fall back on and pay their bills.
The window for this early withdrawal of super has closed now. But there are some other circumstances where you can apply to the ATO to access a limited amount from your super before retirement when you are in need of financial help to:

• Stop you from losing a home you own because you can’t pay the mortgage or council rates
• Cover the cost of medical treatment, palliative care and/or disability services for you or a dependant
• Cover the cost of a funeral or burial arrangements for a dependent. 

You can also apply to your super fund for early access if you:

• Are experiencing financial hardship and can’t pay basic expenses for you and your family. 
• Have a terminal illness, conditions would apply.
• Become incapacitated either, temporarily or permanently, if you have the appropriate insurances in your super.

Both the ATO and your super fund have strict conditions around any claim you make for early access for any of these circumstances. Your super fund can help you find out if you may be eligible for early access and how to make a claim.