Account balance change: 7.12% on the opening balance
Return on Investment: -2.58% of closing balance
Management Fee: 16% of contribution
Looking at each of these figures in turn.
Account balance change: This represents the raw change in my account balance. A positive figure here is an absolute must as it indicates that I haven't lost all of the my contributions to the falling investments, fees etc.
Return on investment: I was expecting this figure to be a negative value. We can look across the Pacific Ocean towards the American economy. I actually thought this figure would be a lot worse, I expected it to be around -5% to -7.5%. I was quite relieve to see this figure of -2.58%.
Management Fee: This is how much I am paying my super fund to management my account. Now 16% of my contribution goes off my superannuation's wallet. When I did the calculation and realised what I am paying, I was pretty upset. This figure is what actually drove me to investigate other superannuation fund and how I can maximise the investment.
At end of my calculation, it came down to the following strategy.
- Lowest fee structure. Two reasons here, firstly minimising fees is one of the very few items about the superannuation fund that can be influence so make it as effective as possible, secondly, I want to maximise the magic of compounding interest.
- Online access. My current superannuation fund does not allow online access. So its performance can not be analysed in a timely manner.
- Good insurance policy. Most superannuation has an insurance component, we need to ensure that the policy is suitable and covers all the family members.
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