NSW suburbs that outperform top super fund

NSW homeowners in over 200 suburbs could be building retirement wealth faster than their super fund, new research reveals.

Comparison site Finder has revealed how Australia’s super funds compared to that of property price growth over the past ten years.

The research found that a shocking 23 per cent – equivalent to around 4.6 million people – said they didn’t have enough money in their super fund or other investments to get by in retirement.

Australian Retirement Trust’s super savings high growth fund had the highest returns, with a 8.79 per cent annual 10 year return, yet there were over 200 suburbs in NSW that out performed that.

Houses in Millfield, Lockhart, Brunswick Heads and Clareville were among the top performers, growing by an average of 11-16 per cent annually over the past 10 years.

Over 200 Sydney suburbs house prices had outperformed the best super fund, according to a new Finder analysis.

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The average 10-year performance across all super funds is 5.7 per cent a year, according to Finder, while Sydney’s 10 year annual compound property growth rate was 6.4 per cent.

Finders money expert Richard Whitten said the more attention you give your superannuation now, the better off you’ll be.

“It’s truly a shame to reach retirement age only to find you have “too little too late.” You can avoid this by taking proactive steps to engage with your super as soon as possible,” he said.

He added that to have a comfortable retirement, a single person might need around $595,000 in their super by 67.

“Many Australians are still well below the amounts suggested for a comfortable retirement, making proactive engagement even more critical.”

Finder’s Richard Whitten said it was important to be proactive about your super.

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Ben Kingsley, managing director of Empower Wealth Advisory and co-author of ‘How to retire on $3,000 a week,’ said your return on investment could be higher with property, but warned there were always risks involved.

“If you’re going to invest in property you don’t want to be speculating, you want to be investing for the decades, not the short period of time,” he said.

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“One of the advantages of investing in property is it isn’t locked away until you’re in your 60s. It gives you the ability to leverage from those returns, to accelerate some growth in further returns – use the proceeds or equity to add to your initial property portfolio, which is something to consider.”

“(Super) is a sort of set and forget for most Australians, with property when you do have ownership you have control, you can tinker with the property itself you can add value to the property,” he added.

Finder analysis of Super Ratings Data on the top 10 ‘Growth’ super funds, with the highest 10-year performance returns.

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He noted it was important to diversify when it came to setting up for retirement.

“You can’t save your way to retirement, you need to put your money to work, whether that’s additional contributions to super, or investing in shares or property, you’re better off starting to think about it in your 30s,” he said.

Canstar’s director of data insights, Sally Tindall, said Aussie’s shouldn’t be choosing between a healthy super amount and a property, but should aim to invest in both.

“It comes down to personal preference, but open your mind to achieving both. Don’t put all your eggs in one basket,” she said.

“It’s not a simple comparison and there’s a multitude of factors, there’s tax implications on both sides, and whether you’re purchasing as an investor or an owner-occupier,” she said.

Recent Labor government tax changes, which apply an additional 15 per cent tax on earnings for super balances exceeding $3 million, would affect an estimated 80,000 Australians (0.5% of super account holders).

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Sally Tindall’s director of insights at Canstar. Picture: Tim Hunter.

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“It will be interesting to see how that plays out over time, as the government has said that $3m won’t be indexed, which could then start to impact many more people in many years to come as the number of people with that sum starts to increase, so that’s another factor in the equation.”

With the super guarantee increasing to 12 per cent on July 1, Ms Tindall said this may encourage some people to take the property route, knowing their employee is contributing more to their super.

“It’s also not just the super vs. mortgage, there are plenty of other things like shares people could be putting their money into. It’s important to understand what the mix is and understand the pros and cons and the sacrifice you might have to make, as well as the benefits you can get from each one.”

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TOP 20 NSW GROWTH SUBURBS OVER 10 YEAR AVERAGE