Let's max our superannuation

Why am I talking about superannuation on a jewellery website?
You might be here for timeless and elegant jewellery, but I believe financial literacy is just as important. Super is one of those things we often overlook. Financial literacy gives us the tools to make informed choices, navigate life with confidence, and feel empowered to take control of our future. And hey, when you’re financially savvy, you might just have more to spend on Claria pieces!

The superannuation question

So, I was scrolling through Reddit the other day, and I came across a question which went something along the lines of: Why do super funds’ international indexed shares have a lower return than an ETF tracking the same index? Naturally, I went down the rabbit hole as I seek "clarity" as always, did some digging, and found out it’s mainly about tax.

There’s a great article, The Problem with Pooled Funds, that explains this in detail. I recommended it to all my friends, and I truly believe, they’ll be thanking me when they retire — probably for making them richer by double, triple, or even ten times.

Here’s the summary version of the article:

• Pre-mixed investment options like Balanced or High Growth have taxes applied at the fund level. This means taxes are gradually deducted each year. But with direct investments (like ETFs), you don’t pay taxes on those gains until you actually sell.
• Within super, if you invest directly in ETFs instead of pre-mixed options, you avoid paying capital gains tax at the fund level.
• Once you hit retirement and start converting your super into pension phase (which is tax-free on investment earnings), if your super balance is under the $1.9 million cap (for 2024), you don’t need to sell anything to move to pension phase. This means you won’t have to pay capital gains tax on the earnings you’ve built up over the years!

Conclusion: If you want to avoid unnecessary taxes, go with a super fund that allows you to invest directly in ETFs, for example, AustralianSuper. 

A book that changed my perspective

I also highly recommend Tony Robbins' book Unshakeable — it really made me rethink my approach to super and investing:

• The power of compounding.
• Investing in index funds instead of trying to outsmart the market by picking individual shares.
• Don't be afraid of market corrections or crashes, which are the best opportunities to invest - financial winter is always followed by spring. Did you remember March 2020 when Covid hit?
• Real wealth is emotional, psychological and spiritual. Our brain operates naturally in survival mode - fight or flight. But we can make a decision to stick to beautiful state.

Disclaimer

Just to be clear, I’m sharing what I’ve learned along the way — not giving financial advice. Please make decisions responsibly and consult a professional if you need personalised advice.