Super is the 9th wonder of the world
Albert Einstein famously said “Compound interest is the eighth wonder of the world. He who understands it earns it … he who doesn’t … pays it.”
If compounding interest is the eighth wonder of the world, superannuation is surely the ninth. It is an opportunity for every Australian to create wealth in ways previously available only to the wealthy.
Why super in Australia is so good
In Australia, super combines the benefits of compounding interest, a low tax rate, and forced savings (contributions) from employers over 40+ years of your working life.
Let’s breakdown how it works.
Compounding means you profit greatly when you save. It is the core of how money works. The sooner you start to save, and the longer you save, the more your money will compound or grow over time.
Low tax for most Australians means 15% of the money their employer pays into super (concessional contributions). This provides an immediate return on your money. For example, if your marginal income tax rate is 37% and you are paying only 15% on super contributions, your return will be 22% before investment returns.
Forced to save 9.5% of our salaries (lucky us). Super forces us to save over our working life and locks in compounding returns until we are at least 60 years old. Without super, many Australians would have no personal savings at retirement.
Am I entitled to receive super from my employer?
You are entitled to receive employer-paid super if you:
are age 18 years or older;
earn more than $450 in a calendar month; and
work more than 30 hours per week.
Your entitlement to super applies if you are employed full time, part-time or as a casual. This money will be paid to your chosen super fund or, if you have not made an election, to your employer's default fund.
General advice warning
Rollit Wealth provides general information only. You should assess whether the information is appropriate for you having regard to your objectives, financial situation and needs and consider obtaining independent professional advice before making an investment decision. If information relates to a specific financial product you should obtain a copy of the PDS for that product and consider that statement before making a decision whether to acquire the product. Roll-it Super Pty Ltd. ACN 611 756 140. AFSL Authorised Representative No. 1273703 of MSC Advisory Pty Ltd. ACN 607 459 441. AFSL 480649 (MSCA).