Moving to low cost super fund

Hi All,

I just finished reading Barefoot Investor. First action for me is to move away of the existing expensive super fund - MLC MasterKey Business Super (myself) and AMP (wife). Both me and wife are near 40 now and started thinking building retirement kitty.

My questions.

1. My and my wife;s employer pays life insurance with the existing super fund. So i might still have to keep MLC/AMP? Should i re-direct funds from MLC/AMP to Hostplus at regular intervals after employer pays into it?

2. Is Hostplus Indexed Balanced Fund still a best bet ?

3. Can you combine wife and your super into 1 fund and save monies on fees?

MLC MasterKey Business Super FEES
Investment fees 0.46% pa
PLUS Administration fees1 0.51% pa + $78 pa
PLUS Estimated indirect costs for the superannuation product - 0.33% pa

Cheers,
MKB

 

1. depends. super for my company default is at no cost to me and I put all my contributions into another fund. refer to your pds.
2. best is subjective, you'd need to look at costs, risk profile,returns, and if fund aligns to your ethical position.
3. don't think you'd save much to be honest, best to speak with fund and accountant.

 

Good on you for taking some positive steps to better your financial well being! However:

Just because Barefoot Investor found "the best" super fund two years ago when researching for his book, does not mean that it is still the best. "The Best" is subjective too - what is best for a 40 year old in your particular circumstances may be different from whatever was best for Scott.

Another factor is that there can be several Super companies that all perform really well and there isn't much point agonising which one is exactly the best. As the economy changes and you age, you might want to change the investment mix within the fund, and each parcel of assets will have different fees. You win one year, lose the next, and round and round it goes. Have a quick look online at various asset classes within a few different Retail Funds to see if your fees are too far different.

Be careful when you say that your employer pays for your insurance - I find that suspicious - without researching your specific fund and being privy to your specific employment contract. In my experience, the fund takes your insurance premium out of your account rather than send you a separate invoice. In reality most of us pay it ourselves but we believe that it magically just happens.

 

Are you suggesting having two super fund accounts?

 

@mkbonline, I wouldn’t focus on Fees; I would focus on Net Returns.

I would rather be in a Fund consistently achieveing 8% pa gross return with 1% fees THAN be in a Fund consistently achieveing 5% pa gross return with 0.5% fees.

 

Check out whether the insurance coverage is much different from the current offer, if you have an older policy it may be worthwhile keeping a small amount in the old super account to keep it going and not take out insurance under the new fund.

Shop around for a fund which suits you - check out superratings.com.au

You can't combine the money into one account as each member has a different ledger/profile/balance etc.

 

Always ensuring there are sufficient funds to cover the weekly/monthly/annual cost otherwise the policy lapses I understand.

 

depends on if you pay for it or your employer. I have zero balance and have a policy.

 

I'm in a similar situation. My employer pays Insurance Premium and Admin fees (but not Investment fees) for MLC Masterkey. My preferred investment option for the bulk of my money is Vanguard index funds. Cheaper for me to do this in Sunsuper than MLC Masterkey. So I moved the bulk of my funds to Sunsuper.

Employer still pays into MLC and every 12 months I move the 'excess' in MLC over to Sunsuper.

What's left in MLC is invested in a speciality fund that I would otherwise choose to invest in outside of Super anyway.

Just make sure you don't cut it too fine with the amount of funds you leave in MLC. Don't want to hit -ve balance if they take fees out an an inopportune time or if your investment performance tanks!