Investment Updates

Shannon:
So David, a lot can happen in a year. If you had to sum up the year that was and what it meant for our members, what would you tell us?

David:
Shannon, first, it's great to see you, and great to be back and see you all again. Well, I'm thrilled to say for both our accumulation and our retired members, this has been a really positive year for their super and their super returns. In fact, for the second year in a row, we've delivered some of the highest returns in our My Super Lifecycle option compared to other industry super funds.

Shannon:
Fantastic.

David:
That's been 11.02% for our high growth options. That's our most popular option, and it's default for members aged 55 and younger in our My Super Lifecycle.

Shannon:
How impactful will that be for our members as they come into retirement?

David:
Yeah, well, let's talk about that My Super Lifecycle option. So, you might remember three years ago, we changed the design of that product, seeking so members would accumulate more while they're working, and then slowly de-risk them as they approach retirement. Well, I'm pleased to say that's really paid off.

Our analysis shows for the 800,000 members using that option, they've seen an extra $2.5 billion in their retirement savings compared to the median My Super fund.

Shannon:
What does this all mean for our retired members?

David:
Yeah, well, I mentioned at the beginning it's been a good year for our retiree members as well. So, our conservative balanced option, that's the option favoured by many of our retiree members. That's delivered returns of 7.66%. Now, that is a lower risk and lower return option that's really favoured by those retiree members. And we do invest it differently.

We do try and protect against downside, protect against market falls, because we know that capital preservation is so important for those members. But also, it's still really important to still try and get growth, and pleasingly, that return has been more than inflation.

Kate:
Yeah, the cost of living is such an issue for many Australians, and particularly our retired members. So it's good to know that their savings is keeping up with the cost of living.

David:
That's right.

Shannon:
What are the strategies we had in place to see us through this bumpy year that was financial year 24?

David:
Yeah, well, that's right. Hearing those numbers, you might think it was all smooth sailing. Certainly, it was a bumpy year. There were certainly ups and downs in markets along the way. And certainly, some of the geopolitical events we'd all be familiar with throughout the year. I guess as a call out, some of the things that have really pleasingly paid off for members and seen that higher return.

We do invest a little bit more in international shares and a little bit less in domestic.

So that's worked really well. And one other thing, we remember on the last episode, we talked about some of those trends towards technology and data.

So we've seen those investments in infrastructure, data centres. They've seen really strong returns. And also, I mentioned that international share portfolio.

Members have got investments and exposure to those mega cap tech names you're also familiar with.

So Apple, Amazon, Nvidia. And they've delivered some fantastic returns.

Shannon:
Well, we all know about new year's resolutions. And I'll be the first to admit that I am not great at keeping mine. But Iby, am I right in assuming that you might be a new financial year resolution guy?

Iby:
Shannon, What makes you say that? But yes, I do. It's actually a really great time to reflect on what you've achieved in the last 12 months. Also a good time to set or reset your goals, your financial goals, for the next 12 months. The start of the financial year, or this financial year, is extra special. The tax cuts that we heard about, they've started since 1 July.

Effectively, it means that most people will have a little bit of extra money in their pockets. I think it's important to make a conscious decision to do something with that money. Something that's important to yourself. Something like paying down your debt, maybe using it for bills, maybe even contributing some of it to super.

Shannon:
I was waiting for you to talk about super then.

Iby:
Well, what sort of financial planner would I be if I didn't?

Kate:
That's right.

Iby:
So the start of the year is a great time to set up a regular contribution. Rather than trying to find a lump sum at the end of the year, setting up that automatic payment each fortnight, or each time you get paid, makes it a heck of a lot easier.

Kate:
Much easier.

David:
And small contributions also avoid some of those timing issues. So I mentioned ups and downs in the market along the way. So those small contributions have the effect of averaging your cost. Dollar cost averaging, you call it, Iby.

Iby:
Absolutely, David. So it happens automatically. You don't need to think about it. I think the most important thing to keep in mind is that small amounts contributed regularly over long periods of time make a huge difference.

Shannon:
And Kate, what about our members who might be closer to retirement, or certainly seriously considering what their options are? Is there anything different they should be doing as we've come into the new financial year?

Kate:
Yes, and I think, well, if you're 55 and over, you might consider getting as much into super as you can. Assuming you've paid off your debts, while it's good to have access to some cash available for emergencies or a rainy day, if you leave the money in the bank account, you'll be taxed at your marginal tax rate on that. Whereas if you move that into super, that's only any income is taxed at 15%. So effectively, you have more for your nest egg that you may be able to access when you hit 60.

Iby:
The other exciting thing is since 1 July, the limit's increased.

And you can actually get $360,000 into super in one go.

Shannon:
Wow.

Kate:
That's right. And it makes a massive difference. And remember, too, that a major benefit of placing money into super is that Centrelink does not count it until you reach pensionable age. So let's take an example.

If one person is 67 and their partner is 59, moving some super from the older to the younger person's name could maximise the older partner's age pension benefits. So if you're getting close to 60 or over, it's a really good idea to have a retiree check in with one of our advisors and discuss these options and work out what's right for you.

Shannon:
OK, guys. I hope you're ready, because we're going to talk super and fast. I'm going to hit you with a couple of prompts. And you're going to tell me the first thing that comes into your minds, OK?

Kate:
Love it.

Shannon:
Are we ready?

Kate:
Let's go.

Shannon:
All right. Last financial year.

David:
Good returns.

Kate:
Your super went up a lot.

Iby:
Better than expected.

Shannon:
End of financial year time.

David:
Oh, sales.

Kate:
Refunds are fun.

Iby:
Tax return time.

Kate:
Refunds are better.

Shannon:
I agree with Kate.

And myths about super.

David:
Well, that it's a long way away, when actually we know that small actions today make a huge difference to retirement plan.

Kate:
I think people think that they need more than they actually do. So just by paying a little bit of attention, log on to My Retirement Planner. You can find out exactly how much you need and what you're on track for.

Iby:
I'm too young to worry about my super. But the reality is, you're actually never too young to start.

Shannon:
Yeah, that's fantastic. Thanks, guys. And thank you for a fabulous episode. I think it's a wrap.
And join me this time next year.

Kate:
Love it.

Shannon:
Fantastic. Thanks.