Stopping And Starting Superannuation Payments, what are the consequences?
When we think of Super funds, pension funds and other long term saving plans we don’t often get very excited. They sound like important even necessary endeavors but not exciting by any measure. But other investments, like futures, the stock market, gold market, now they sound interesting. The truth though is that the vast majority, if not all, of pension and super funds invest in the stock market. The level of risk these pension and super funds desire will be reflected in the type of stocks they invest in.
What has this got to do with starting and stopping your Superannuation Payments? A lot. Many of us view pension funds as an obligation you must carry out monthly in order to get a “right” or something we “deserve” in the future. We don’t often see it as an investment or a stock fund that can do better or worse depending of the fund it is in or the capital invested in it.
However that is exactly what Super funds are. The more you contribute the more cash your fund will have and the more it will grow. Investing in your Super fund is just like investing in the stock market for the long term but with the Government helping you out and providing you with incentives and tax cuts.
With the flexible Super system you can choose what kind of Super fund you want to invest in. If you are a bit of a risk taker you can instruct your employer to deposit your employer super contributions into a Super fund that invests in growth stock. If you are a safer investor you can choose a Super fund that specializes in blue chip stocks. You decide.
On top of this the government will pay co-contributions toward your Super fund. This means that for every dollar you invest in your fund, the Government will match it up to a certain limit. Do you know any other fund that will do that for you.
The only drawback of Super funds, and it is not really a drawback is that your cash is not accessible unless some rather stringent requirements are met, like you being dead, 60 or 65 or terminally ill. But this drawback is actually a bonus because it is probably the only way to keep most of us from tapping into our savings when we feel like buying a car, going on holiday or spending on any other “fun” project.
I hope these arguments present a powerful case for investing in your Super fund as often and as much as you can. Don’t view it as an obligation but as a privilege. If you can invest more in your fund, even if you’re not working, or you’re self-employed, do so. You are going to be hard pressed to find a better deal.