Retirement may seem a little way off, but making contributions to your super from an early age is where you can reap the benefits of compounding – basically, the longer your money is invested, the more time it has to grow, riding out short-term market fluctuations and helping the compounding effect. It’s never too late to start

What is compounding?

Compounding is the concept of adding accumulated returns back to your account, so any earnings on your super are added to your balance on a regular basis to generate more returns. So not only does your initial investment have earnings added to it, you get earnings on your earnings!

If you’d like to learn more (in a general sense) about the effects of compounding, when investing, visit Fido to use their Savings Investment Calculator. Take care to read the background assumptions. In the case of super investments, the results of compounding will be affected by a range of factors including tax, fees and costs.

The scary news ...

Research suggests that a couple will need approximately $50,000 p.a. in retirement to enjoy a comfortable lifestyle in retirement. That sounds like a lot doesn’t it? Especially, if your 9% Super Guarantee (SG) Contribution is the only contribution being made to your super.

The good news ...

The sooner you make additional contributions to your super, the sooner you can take advantage of the benefits of compounding. There are lots of different types of additional contributions you can make.

You’ll need to work out how much you can afford to put into super on top of your employer’s 9% SG contribution. Preparing a budget is a great start.

Bonus - if you make an after-tax contribution

We’ve got some good news about your super that we think you should know. You could be eligible to receive a Government Co-Contribution into your super from the Federal Government of up to $1,000 (subject to some eligibility criteria).

Visit our Help Centre to learn more about the types of contributions that can help you increase your retirement savings.