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Credit: Mathieu Stern

Why Superannuation matters: Insights from a single mum who’s been there

Elizabeth Michelle is a 42-year-old single mother who lives in Sydney with her 11-year-old son. During the COVID-19 pandemic, she made her first-ever investment. 

“The pandemic gave me the time to take stock of my finances,” Michelle said. 

“Many people around me were sharing their experiences of getting great returns across a range of investment platforms, including super, stocks, and ETFs.” Michelle has been slowly building her wealth after a difficult break-up left her with nothing eight years ago. “I had absolutely nothing and had to start from scratch,” she said. 

“It was a lot of hard work, endless sacrifices, and days where it felt I’d never get myself out of crippling debt, but I got there. I’m finally in a position where I’m not living paycheck to paycheck and have savings.”

During the lockdowns, Michelle used her free time to research how to build her wealth and document her journey on her blog, teachingbrave.com. “There are so many great resources out there,” she said. 

“I read many personal finance blogs and books and listened to podcasts. Once you start to understand how it all comes together, it’s an enjoyable process. I was glad to spend my free time looking into what investment option was right for me.” Michelle also turned her attention to her superannuation. 

“I’d consolidated my various super balances many years ago, but most recently, I’ve adjusted my risk portfolio,” she said. “Retirement is still far off for me, so I am making the most of the time I have to invest in options which have the potential to drive me the greatest returns.”

Michelle became interested in index funds and ETFs and made her first ETF investment in July 2020 of $1,000, which has since grown to $12,000. “The returns go up and down, but I have a good grasp of how the markets work now and know that’s how it goes,” she said.

As the COVID-19 pandemic swept the nation, Australians were faced with a new set of challenges and uncertainty. In response, many turned to non-traditional forms of investing, such as cryptocurrency, NFTs, and EFTs, for a sense of control and the potential for financial gain. 

However, a recent survey conducted by Equip revealed that this trend could be placing Australians at risk of retiring with less superannuation and, ultimately, less financial security. 

According to Equip CEO Scott Cameron, the survey, which polled over 2,000 Australians, found that 20 per cent of respondents invested in shares, EFTs, NFTs, cryptocurrency, super, or other investment products for the first time during the pandemic, while 14 per cent increased the amount they invested. The current climate has sparked a sense of adventure in the way Australians save and invest.

The study also revealed that this focus on innovation might be causing neglect of an essential aspect of financial planning: saving for retirement through superannuation.

The study found that nearly a third of Australians have yet to learn how much super they have, while the remaining percentage reported varying levels of knowledge about their balance. This lack of understanding about superannuation could be detrimental to Australians’ financial security in the long run. 

In Australia, a portion of your income must be contributed to a superannuation fund, which acts as a retirement savings account. These funds are intended to provide financial security during retirement and are supported by employer contributions and government incentives, such as tax breaks.

However, it is still being determined how much the average Australian understands about their own superannuation and the importance of saving for the future.

Some may not be fully informed about their options and the steps they can take to ensure a comfortable retirement, such as consolidating accounts, adjusting investment portfolios, or making additional contributions. Australians must educate themselves about their superannuation and take action to secure their financial future.

Seeking advice from financial experts or using resources like the Australian Securities and Investments Commission (ASIC) can also be helpful in this process.

Equip CEO Scott Cameron warns of “gaping holes” in general knowledge about the importance of building a strong foundation for retirement through superannuation. As we navigate these uncertain times, it’s crucial to remember the value of long-term financial planning and superannuation’s role in securing a comfortable retirement.

“While more investment options are emerging, superannuation remains one of the most important financial assets,” said Mr Cameron. It’s concerning that so many Australians have no idea how much they’ve actually saved after years of hard work. 

“Your super balance will shape your retirement years and the type of lifestyle possible, so it’s important to keep a close eye on its progress not just towards the end of your working life but throughout.

“Through this research, we’re seeing that there’s been a huge spike in investing since the pandemic. Australians are clearly eager to educate themselves on how to boost their savings and set themselves up for a comfortable future or prepare for the unexpected.

“We’re entering a new age of investing, with new products like cryptocurrency and NFTs capturing the public imagination. But this shouldn’t be to the detriment of tried and tested investment products like super. Our concern is that Australians are running before they can walk. Think about getting on top of your superannuation before exploring new and potentially riskier investment alternatives.”

Michelle’s priority when it comes to her finances is to have a plan in place for every stage of life. “My emergency fund is looking healthy, so if anything unexpected happens in the near future, I have funds to cover that,” she said. 

“I hope my ETFs will help me purchase an investment property or similar one day, and my super is working hard in the background so I can have an enjoyable retirement when that time comes.” Michelle is one of the third of Australians who knows their super balance almost to the dollar. “I know exactly what my super balance is – I check it all the time,” she said. “It brings me comfort to know exactly how it’s performing. Similarly to my ETFs, it follows the market – sometimes up, sometimes down, but that doesn’t faze me. I am confident it will stay upward in the long run.”

Michelle believes that there is much to be gained if people take control of their superannuation. “Knowing how much you have is a great start – you may be surprised to see how much you’ve already saved,” she said. 

“Equally, your balance might be lower than you expected, which can prompt you to take steps to boost it now.” Equip CEO Scott Cameron agrees, stating that the company is committed to equipping its members with the knowledge and tools they need to prepare for the future.

“Equip offers personalised advice around boosting savings to ensure our members get the best outcome for their super,” he said.

Dynamic Business is a publication and does not provide financial advice. The information provided should be independent of the basis for financial decisions. It is always advisable to seek the advice of a financial professional before making any financial decisions.

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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