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Read your super fund statement and dump dud funds

Reading your super statements is not fun but it can make you richer. Photo: Erwin WodickaIt is that time of year when super funds mail or email annual statements to their members. Yet how many statements remain, if not unopened, at least unread?

Three years ago Essential Media  polled more than 1000 people to find out, among other things, how many were reading their statements.

Fewer than one in four people claimed to read their statement thoroughly. Nearly three out of five people said they opened it and either read it briefly or noted the investment returns.

The remainder either did not recall receiving their statement, had not opened it, or said they did not know how to answer the question.

If that poll were repeated today, the results might be different, because more members are receiving their statements by email.

Some people probably think all super funds are the same, but there are big differences in their performances.

Pick a dud and your retirement income will be substantially less.

Member statements show how your account balance has changed over the past 12 months.

They show the performances of all of your fund’s investment options.

But to really know how your investment is going it needs to be compared with the options provided by other funds that are of the same type.

Most people have their super with their fund’s “balanced” option, which spreads the money between the various investment classes.

By checking on the websites of superannuation researchers, such as www.superratings杭州龙凤论坛m.au and www.chantwest杭州龙凤论坛m.au, you should be able to find your option listed in one of the performance league tables.

An investment option, though grouped in a table with similar options, will still have differences in the way they spread the money between shares, property and fixed interest and the other asset classes.

Markets go through cycles and, at any point in the cycle, shares may do better than fixed interest, for example. That means investment options with a smaller exposure to shares will do worse than options with higher exposures to shares.

You can see why it is short-sighted to make judgments based on short periods of time.

In fact, the better-performing options over the long term are rarely, if ever, among the very top of the league tables over short periods.

The good performers tend to eke out steady, incremental returns that add up over long periods to outdo most other options.

You need to see how your option performs over at least the past five years against the median return, which is the typical return shown in the table.

Investment returns are certainly very important. But before switching to the investment option of another fund there are some further considerations.

For example, fund members have to make sure by switching they do not lose benefits such as life insurance that, at least up to a certain maximum level of cover, is automatic acceptance.

That is where cover is provided to the fund member without the fund member having to undergo a medical examination or submit details of their medical history to the fund.

Twitter: @jcollett_money

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