Payslips, tax and super are a riddle. This is absolutely a stale take, but an accurate one. In fact, I’d bet half of you don’t even look at your precious little payslip when it arrives every month (yes, that’s a thing we are supposed to do) and that’s probably because numbers are just one big riddle to you. Well, same.
Today, we’re going to break down one very specific finance term that relates to your superannuation and, yes, you should care because it actually relates to you making money without really trying. Say hello to “net benefit”.
What Is Net Benefit?
Simply put, the net benefit is how much money you actually earn on your super contributions over time. The way it’s calculated is by taking the investment return you see arrive in your account from your chosen super fund, subtracting any fees and taxes, and the leftover number is your net benefit.
Keep in mind that it doesn’t take into account any insurance premiums you might pay.
Is It Something I Should Consider Before Choosing A Super Fund?
The short answer? Yes. Longer answer? The whole name of the super game is to turn your slow and steady contributions into a hefty sum by the time you retire. So, when you’re comparing super funds, the main indicator of how much your money will actually grow (i.e. how effective your fund is at making you money) is determined by the net benefit figure.
The lower the fees and the more smart, proactive investing your fund does, the bigger net benefit.
What Does All This Mean For Me?
Being clever about your super is one of the best things you can do for your future self but, admittedly, it’s confusing. So you walk away from this article with not only a new finance definition but also an actionable step to ensure you’re getting the most bang for your (superannuation investment) bucks.
Here’s your task: shop around and compare the — wait for it — net benefits of various funds. Check out the moneysmart site or use the nifty CareSuper Compare My Super Calculator where you can put your starting balance, your salary, select a super fund you want to compare (say, your current fund?) and select the time period you want to compare, too. That’s it — it’ll tell you how your fund stacks up and help you narrow down whether you need to change funds or stick where you are.