How to rebuild your super balance after COVID-19

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June 24 2020
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Members who have needed access to their superannuation are being advised to take advantage of government schemes to rebuild their super balance.

In a conversation with nestegg, NGS customer relationship manager Karel Tomita explained the importance of compound returns for members, as well as those looking to take advantage of government regulations.

“If they have accessed their superannuation under COVID, there are a few things they could review.

“You’ve got the government co-contribution, which you can do, but if you’re accessing your super under COVID, I would be very conscious of cash flow,” Ms Tomita said.

She said members who have secure employment and have lower incomes can also benefit through a $1,000 contribution after tax.

“Depending on where you sit on the income threshold after, you might be able to make a $1,000 contribution. The government will match that up to $500,” Ms Tomita said.

The superannuation expert also explained that due to the power of compound interest, members who have withdrawn their superannuation early can review their strategy to ensure performance matches their long-term goals.

“Review how your super is actually invested. A lot of people join a superannuation fund and just stay with the default option,” she said.

“Thinking of first in the context of what is your time horizon, are you going to access more of your super in the new financial year?”

“If that is the case, let’s think in that context and what is an appropriate strategy for yourself.”

Ms Tomita noted that members who are not looking to access their superannuation again in the next financial year should understand different asset classes to know what would work best for them.

“You have growth assets – things like shares, infrastructure, which are more volatile but get most of the returns – and the defensive component, cash, bonds, term deposits, which provide that stability at the expense of a higher return.

“Particularly for younger members who might have accessed their super, in a long-term context you might want to consider going into a growth-orientated investment option.”

However, she cautioned members who use this option that the additional volatility will mean less smooth returns.

“You need to expect markets will go up and down. So the more you have in growth style assets, the range between worst-performing year and best-performing year over the long term will be wider.

“But if you can expect that is part of the journey, it could be a method for you to achieve higher returns over the long term,” Ms Tomita said.

Finally, she highlighted to younger members – who can take advantage of government benefits or co-contributions – that they can achieve superior performance due to timing.

“If you’re in a position to put more into super, the earlier you start, the better, because you have more time in the market to generate higher returns,” she concluded.

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About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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