Superannuation Fund: July Backdate

By | January 18, 2016

Author: Mr DDU.

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One day we want to be able to live purely off the income from our investments. The earlier this happens in our life, the better.

What is Superannuation?

In Australia, if you’re an employee you are paid 9.5% extra of whatever you earn every 3 months into a retirement account called Superannuation. Within the Super account you can invest in whatever you want, but you can’t access it until you’re at least 60. I want to retire before then, but I still want to make it grow as much as possible with the 9.5% money that is automatically added.

As with our dividends, we’ve kept track of how we’ve been doing since the start of the new Aussie tax year (July to June) so I’m starting with my Super balance from July 2015.

Superannuation balance:

As at 1/07/2015

Total $5,235.69

Made up of:

International Shares

$1,584.68

Property

$1,026.91

International Sustainable Shares

$1,581.84

Australian Sustainable Shares

$520.87

Australian Shares

$521.39

All of the above amounts are funds, rather than individual stocks. I have invested a lot of my Super money into international shares because with our ‘normal’ investing I don’t think we will be investing much in international companies that aren’t on the Australian Stock Exchange, nor will we be invested much in property (either REITs or owning property).

I can invest in individual shares once I have a $6,500 balance, so hopefully not too far away.

 

Thanks for reading this article about our investing journey Down Under.

Onwards and upwards!

9 thoughts on “Superannuation Fund: July Backdate

  1. Dividends Down Under Post author

    Hi RTW/Tom, thanks for visiting our blog! (where did you learn about it?)

    I’m with an industry super fund. One that has those balanced/growth/high growth/age related/etc type options with a pre-determined mix. The 2nd option is you can choose a DIY mix which is what I’ve done. The third option is investing in individual shares on the share market – but each trade must be $1,500+ in value, you must have $5,000 invested in total in the 1st or 2nd options I’ve mentioned (so you need $6,500 before you can start choosing yourself).

    So much paperwork and the high brokerage costs make international shares seem unappealing (I can understand why Platinum and Magellan get a lot of business). Maybe in the distant future when I want some more diversification.

    1. remembertowater

      I believe Twitter sent me your way. Most of the finance type blogs are US, but have only found a few AU ones. And while general info is the same everywhere, some specifics are very different. The 2 that tend to come up are IRA/401k/Roth vs Super and Tax deductions (eg on interest for your house!!!)

      1. Dividends Down Under Post author

        Well I’m glad you found us. That was one of the reasons we started this blog, as there really aren’t many Aussie blogs. It’s really interesting seeing the difference between countries. I hope to see you here again 🙂

  2. remembertowater

    Keep up the good work! Quick question, where do you have your super that allows you such granular control? And I totally agree with the international vs aus shares. I have zero international shares outside my super.

  3. Dividends Down Under Post author

    Thanks for your reply IH. I’m going to post an article soon explaining Superannuation but practically it’s money above and beyond your pay but sometimes businesses express that as a salary package. The Superannuation 9.5% portion is tax at a lower rate, 15% (compared to normal income tax rates). I will give you examples of answers to your question.

    If your ‘normal’ salary is $100,000 before tax and $20,000 tax, you’d receive $80,000 into your normal transaction bank account over the course of the year.
    Then, in addition to that, the employee would receive 9.5% ($9,500 with this example) paid to their Superannuation account. So in total the employer has paid out $109,500.

    Sometimes an employer (usually big employers) will advertise this as ‘Annual Salary Package of $109,500’, so you have to work backwards and take off the superannuation portion, so you’re left with $100,000 normal salary. Obviously if you’re paid by the hour, the advertised $20 an hour would be the normal rate, Superannuation payments would be in addition to that (eg $21.90 cost an hour in total to the employer).

    Is there tax on the $9,500? Yes. The Govt takes 15% tax on that. So $1,425 tax off, leaving $8,075 to arrive into your Superannuation account.

    So in summary, on a $100,000 normal salary, you’d pay $20K tax and receive $80K net into the bank.
    You’re also paid $9,500 for Superannuation, pay $1,425 tax and receive $8,075 net into your Superannuation account.

    It’s that net payment into the Superannuation account that I’m choosing to invest into the different categories and that’s what my update is about 🙂

  4. Investment Hunting

    This is an awesome perk. Is this money actually part of your salary and subject to tax or is it money above and beyond your pay?

  5. Jef Miles

    Man it’s a shame about the balance not being as high as it could be although this really shows how fortunate I was to have jobs throughout uni & then work for the govt for a bit & get decent levels of super..

    I’m sure your super will increase however I must confess that super for me is money that if it ends up being there will be a bonus.. I’ll be financially independent (fingers crossed) long before I can consider touching super although admittedly it is good for Aussies.. Shame about the change in legislation and that the govt keeps on changing the goal-posts with legislation although probably a different conversation 🙂

    1. Dividends Down Under Post author

      I agree Jef. We want to ‘retire’ well before super access age so we must build up our assets outside. Whatever happens with super, we’ll do our best to grow it.

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