The Power of 1%

Low Fees

Whether you’re a freedom loving biker or billionaire miner, the 1 percenter’s scale up their presence on this planet and make an impact, positive or otherwise.  The same can be said for saving 1% on a fees or adding 1% to your interest rate of return.

 

If you can move from a dreamer to a strategic planner (same same but different), you can create tens of thousands of dollars in your future that many won’t achieve using the same savings rate.  A little bit of education and action is all it takes.

 

As competition between Australian super funds heats up to grab your slice of potentially 40 years of fee contributions, superannuation funds will be forced to reduce fees and perform better.  The government has legislated that all employers need to make super contributions for each employee, as a consequence, an endless river of cash flows through to superannuation funds, lulling some into inertia.

 

Throughout your working life your contributions to superannuation will vary, hopefully you can contribute more to super each year or even contribute up to $25k.  The government may move the compulsory contribution rate up and down, but as an individual consistently making regular contributions will make for a larger account balance in the end.

 

As no one solution fits everyone, trying to calculate what size super balance you’ll have in the future is nigh on impossible.   No one calculator could accurately produce the results either.  The below is just a simple example to demonstrate of what 1% difference can make over 30 years of contributions.

 

Starting Amount

$0

$0

Annual Contribution

$10,000

$10,000

Interest Rate

7%

8%

Years

30

30

Total Contributed

$300,000.00

300,000.00

Total Interest

$644,607.86

$832,832.11

Total

$944,607.86

$1,132,832.11

Savings Increase

$188,224.25

16.6%

Compounded Annually

 

Life challenges such as illness, divorce, recessions, pandemics, periods of unemployment, raiding your super, inflation- excluded.

 

SFF