How To Optimise The Performance Of Your Superannuation Fund

We are now around one year on from the depths of the first outbreak and lockdown.

Going back to February 2020, we saw the stock market lose about 40% in a couple of days and this highlighted the volatility of shares and the financial market in general.

At the time, people sought feedback and opinion from b Invested founder Nathan Birch, who reminded us all that he is not invested in stocks. He likes property, crypto, metals and other financial vehicles, but he doesn’t see value in stocks.

Last year he said he thought there would be a lot of zombie companies in the financial marketplace in the aftermath of the first serious pandemic lockdowns. These companies were overvalued, despite having no returns. Their value was based on nothing of substance.

In the 12 months since, markets have rebounded and gone up in value, but it’s hard to quantify how and why.

What does it mean for superannuation?

Nathan was talking to someone in the process of setting up a self-managed super fund (SMSF).

He asked how much they had in their super and it turned out they had around $185,000 now, compared to around $165,000 in January 2020. At the lowest point, their super balance had been around $50,000 less.

So, considering the contributions they would have had to make, their super hasn’t gone up much in 18 months really. Looking at their unit value, it turned out the unit value of their fund was around 95 cents per unit in January last year and is around 98 cents per unit now.

A lot of people might think ‘wow, I just made 3% in a year from my super fund’.

But here’s the thing. Sure, the super fund has gone up 3% in 18 months, but what has happened to the value of currency in that same period? If you had $100,000 in your super, what would that have bought you in 2020? Compared to today?

Everything has gone up

Let’s just think about the quality of life you could have had if you had $500,000 last year, compared to $500,000 this year. What you could buy? Well this year, you could buy less of your iPhone, you could buy less of a car, of food, less of everything that’s around us, however people are satisfied by knowing their super has had a marginal improvement and therefore their nest egg is “safe”.

After financial markets bounced back from their 30 or 40% crash over a couple of days last year, people were saying ‘look, the stockmarket is going up, it’s record highs’… but has it really gone up, or is it just trying to keep pace with inflation? Is it just a Ponzi scheme, is it overvalued? That’s the question at the moment.

Where’s the value?

If you are a value investor, or a contrarian investor and you like buying things of value, you’d be hard pressed to see any value out there in those financial markets today.

If you had retired last year with $100,000 in your super fund, or if you retired today with $100,000 in your super fund, it’s not going to buy you much. Have you had a look at what is happening with your super fund? With your share portfolio? And with your other assets?

A lot of people want to know how to get involved with a SMSF, how to protect their super, build some structure in their super and improve and optimise their money’s performance.

Reach out to b Invested at 1300 367 925, or email us at admin@binvested.com.au. We have lots of information, webinars and educational tools to help you understand more.