Value of advice highlighted for super accounts

Responding to short-term market moves can have a detrimental effect on your super balance, as those who switched to cash last March could be up to $27,000 worse off (based on a balance of $100,000), according to SuperRatings.

Kirby Rappell, SuperRatings executive director, said: “We looked at the impact of switching out of a balanced or growth option and into cash at the start of the pandemic and found that those with a balance of $100,000 in January 2020 and who switched to cash at the end of March would now be around $22,000 to $27,000 worse off than if they had not switched”.

This effect of switching into cash as a response to market turmoil was also seen when looking at returns over the past 15 years, as a typical balanced super option balance of $100,000 in July 2006 would have accumulated to $247,557.

Rappell said most super funds offered scaled advice for free or at a low cost, with members able to get advice on topics such as contributions, investment options, insurance in the fund and the transition to retirement.

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“For members who want more tailored advice, some funds will offer comprehensive advice that will also take into account your financial assets outside of superannuation,” Rappell said.

“While there will be a cost associated with this comprehensive advice, most funds will allow the cost of the advice to be deducted from the superannuation account, just make sure you check any costs and how they can be paid before agreeing to get the advice.”

Growth in $100,000 invested over 15 years to 31 July 2021