Seven things I would tell my younger self about superannuation and investing

At 60, retirement no longer feels like a distant event. It is close enough to imagine the lifestyle I want, the experiences I hope to enjoy and the financial decisions that will shape the years ahead.

Looking back to when I first started work, superannuation was rarely something I thought about. It appeared on my payslip, but retirement seemed so far away that it was easy to assume everything would simply work itself out.

Knowing what I know now, these are the seven things I would tell my younger self.

1. Start paying attention immediatelyDo not wait until your forties or fifties to understand your superannuation. Learn where your money is invested, what fees you are paying and whether your employer contributions are being received.

   Even small decisions made early can have decades to influence your eventual retirement savings. Superannuation should not be ignored simply because you cannot access it yet. It is still your money and an important part of your future.

2. Time is your greatest advantageWhen you are young, the amount in your super account may look disappointingly small. However, time allows investment returns to build on previous returns through compounding.

   Starting early can be more powerful than trying to catch up later. A modest additional contribution made regularly over many years may have a greater impact than a much larger contribution made shortly before retirement.

   The earlier you begin, the less pressure you may feel as retirement approaches.

3. Understand how your super is investedSuperannuation is not simply a savings account. In most cases, it is invested across assets such as shares, property, fixed interest and cash.

   Different investment options carry different levels of risk and potential return. A younger person may be comfortable with more market movement because they have many years before retirement. As retirement gets closer, their priorities may change.

   Do not blindly accept the default option without understanding what it means. Seek professional advice before making significant investment changes.

4. Fees and unnecessary accounts matterIt is easy to collect several super accounts when changing jobs. Each account may charge administration and investment fees, and some may include insurance premiums.

   Multiple accounts can quietly reduce your retirement savings over time. Consider whether consolidating accounts is appropriate, but first check whether you would lose valuable insurance benefits or other features.

   A qualified financial adviser can help you understand the consequences before you act.

5. Invest according to a plan, not your emotionsInvestment markets rise and fall. When markets decline, it can be tempting to move everything into cash. When markets are performing strongly, it can be tempting to take more risk.

   Emotional decisions are often made at precisely the wrong time.

   Develop an investment strategy based on your objectives, timeframe and tolerance for risk. Review it regularly, but do not constantly change direction because of headlines, fear or short-term market movements.

6. Retirement is about lifestyle, not just a numberA retirement balance is important, but it is not the complete picture. Think about what you want retirement to look like.

   Will you travel, renovate, volunteer, help family members or continue working part-time? Where will you live? What ongoing health, housing and transport costs might you face?

   The clearer your lifestyle goals become, the easier it is to estimate how much income you may need. Retirement planning should connect your finances with the life you hope to enjoy.

7. Good advice can make a lasting differenceSuperannuation, taxation, insurance, investments, retirement income and estate planning can become complicated. Rules also change, and strategies that suit one person may be completely inappropriate for another.

   Do not rely solely on friends, social media or workplace conversations. Seek advice from a suitably qualified financial adviser who can consider your complete circumstances.

   At 60, I would tell my younger self that superannuation is not something to worry about later. It is something to understand early. Small, informed decisions made throughout your working life can provide greater choice, confidence and independence when retirement finally arrives.

If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.

This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.

(Feedsy Exclusive)