Understanding The Basics of Superannuation

What Is It?

Superannuation, or super as most of us know it, is a good long-term savings plan, which will provide you with an income when you retire. For most Australians, super will be their main form of retirement income. For this very reason, it is important to seek the expert advice of a Melbourne accountant or a small accounting firm in Melbourne, instead of managing it on your own.
During your working life you make contributions to your super fund and the earnings you receive are reinvested, building up the value over time. The money that you put into your super fund must generally stay there until you reach retirement, or when you begin your transition to retirement, both after a set minimum age.

As contributions to your super fund and their earnings are generally taxed at just 15%, this makes super one of the most tax-effective investment vehicles.

If you would like to know more about super speak to your Melbourne accountant or a small accounting firm in Melbourne to gain a better understanding how an expert financial advice is important in managing and growing your superannuation.

How Does It Work?

To understand how superannuation works, it’s important to keep in mind that super is a framework for holding investment assets. It’s not an investment in itself. Super funds can offer a range of investment options and asset classes that may include cash, property, shares and fixed interest.
When you put money into your super fund and choose your investment options, you are actually buying units in these funds (if the super fund is unitised). The number of units you receive depends on the daily unit price. This price will vary daily according to changes in the market.

Given the idea that your super is essentially your retirement savings or nest egg, it is only practical that you seek professional expertise in handling and growing your portfolio instead of managing it on your own. By choosing to enlist the services of a Melbourne Accountant or a small accounting firm in Melbourne, you have better changes to enjoying a good return for your investment instead of using a DIY approach.

Money can be put into your super fund by you, your employer, your spouse and sometimes even the Federal Government. Typically, if you are working, your employer will currently contribute at least 9.25% of your salary to your super fund. This is known as compulsory superannuation guarantee. This rate is set to increase gradually to reach 12% by 2020.

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