Here are three quick tips you can use to tidy your super in just 10 minutes this weekend!

Superannuation is probably the most overlooked asset in a typical Aussie’s net worth. Yet I think it’s vital for all Australian’s retirement prospects that we ensure our super is in order. Einstein didn’t call compound interest the ‘eighth wonder of the world’ for nothing, and that’s exactly what superannuation is designed to harness!

Super tip 1 – consolidate, consolidate, consolidate

I think everyone agrees that paying fees to your super fund manager isn’t fun. And yet there is far too many people paying at least double (often more) the fees than they otherwise should be. That’s the consequence of having two or more super funds. You don’t get a ‘buy one, get one free’ offer.

Unless you have a really good reason, I don’t think anyone should have more than one super fee or more than one fund taking their pound of flesh from your retirement. It’s won’t take more than a few minutes to consolidate your super, so make this weekend the time to do it if you haven’t already! It’s worth checking  – even if you don’t think you have more than one, you might be surprised!

Tip 2 – invest in an appropriate asset class

Most Aussies don’t give too much thought to how their super is invested on their behalf. In fact, superannuation giant AustralianSuper reports that over 90% of their customers opt for the ‘balanced’ option. But if you’re under 40 or have a higher risk tolerance, you might be missing out on some long-term gains by not selecting a more aggressive, share-dominated portfolio.

Balanced funds are designed to balance both risk and returns using ‘safer’, low-risk investments like cash and bonds. But risk management might not be really necessary if you’re decades out from retirement. And history shows that shares like those in the S&P/ASX 200 Index (ASX: XJO) are the best path to wealth creation

So have a think about your own risk tolerance and when you plan on retiring. You might come to the conclusion that you’re better off investing in a higher-growth option.

Tip 3 – focus on fees

There are only 3 things that will affect the amount of money you will have when you eventually decide to retire: the cash you put in, the returns you can get and the fees you pay. Of course, most people earn as much money as they can, so the first point is moot (although, you can also consider salary sacrificing). For the second point, see tip 2. 

But fees are something we can always control. The range of fees that various super funds charge is staggering. Some funds even charge their clients over 3% per annum. There are easy ways to compare your super fund’s fees online, so make sure you’re not overpaying for your retirement. These costs can literally drain tens of thousands of dollars or more from your retirement over a working life, so staying on top of them is something that you want to consider if you’re serious about retiring with as much money as possible.

More reading

• These were the worst performing ASX 200 shares last week
• Where to invest $1,000 in ASX ETFs today
• These were the best performing ASX 200 shares last week
• How these 3 ASX financial shares have proved their doubters wrong
• How to use ASX shares to become a millionaire

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last week was another positive one for the S&P/ASX 200 Index (ASX: XJO). The benchmark index climbed a sizeable 1.7% to end the period at 5,497 points.

Unfortunately, not all shares were pushing higher with the market last week.

Here’s why these were the worst performing ASX 200 shares over the period:

The Southern Cross Media Group Ltd (ASX: SXL) share price was the worst performer on the index with a 9.4% decline. This media company’s shares have been very volatile during the pandemic due to concerns over weak advertising markets and its highly dilutive capital raising. This latest decline means the Southern Cross Media share price is now down 86% from its 52-week high.

The Austal Limited (ASX: ASB) share price was out of form and fell 8.3% last week. This shipbuilder’s shares have come under pressure this month after it was overlooked for a major U.S. Navy project. Austal was competing to construct Guided-Missile Frigates, but was pipped to the post by Italian rival, Fincantieri. According to Reuters, the 10-ship contract is believed to be worth upwards of US$5.5 billion.

The Unibail-Rodamco-Westfield (ASX: URW) share price was a poor performer with a 7.9% decline. This led to the shopping centre operator’s shares hitting a record low last week. Investors have been selling the company’s shares amid concerns over lockdowns and the state of bricks and mortar retailing across the world. The Unibail-Rodamco-Westfield share price is now down 70% from its 52-week high.

The NIB Holdings Limited (ASX: NHF) share price wasn’t far behind with a 6.5% decline. This follows the release of government data last week which revealed that thousands of people have dumped their private health insurance during the pandemic. APRA’s data showed that younger demographics have been cancelling their policies during the three months to March 31. Cost savings and the inability to use their extras is likely to be driving the cancellations.

More reading

• How to tidy up your super in just 10 minutes this weekend
• Where to invest $1,000 in ASX ETFs today
• These were the best performing ASX 200 shares last week
• How these 3 ASX financial shares have proved their doubters wrong
• How to use ASX shares to become a millionaire

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Austal Limited. The Motley Fool Australia has recommended NIB Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Early retirement is a goal or dream I’m sure most people share. However I believe that with a little smart saving and investing early, over time this dream can become a reality.

To see how, we will start by looking at a persons total economic wealth, showing how they can move into the retirement phase from the accumulation phase more quickly.

Total economic wealth

At any time in a person’s life, total economic wealth is represented as the sum of their financial capital and human capital.

What is financial capital?

Financial capital is basically the sum of all your assets minus your debts.To calculate your financial capital, add up all your savings, share portfolio, superannuation, properties etc, and subtract any debts such as mortgages or student loans you may have.

Obviously financial capital is lower for most people when they are younger as they have not yet had the time to grow their wealth. However, this is where people who are more responsible with their money can see it grow much faster as the effects of compounding take hold. This will help push them closer to their retirement phase.

What is human capital?

Human capital can be thought of as the present value of a person’s expected income from employment throughout their entire life. As you enter the workforce, your human capital is at a maximum since you have the greatest number of years left to work until retirement. Hence as you age and work, your human capital decreases.

So what does this mean?

Roughly speaking, human capital and financial capital are inverse to each other. This can be seen through the chart below.

Chart by author

As a working person ages, their human capital begins to reduce as part of their future earnings are realised. A portion of this income will be saved and often used to pay down a mortgage. In addition, their superannuation will increase as it is paid by their employer. All of these items will increase their financial capital. This continues through the accumulation phase until enough financial capital has been raised to support them through retirement. 

So it appears that the solution to being able to retire early is by growing your financial capital as quickly as possible. This doesn’t mean through risky investments, but instead by starting early and investing regularly. Which is where I believe ASX shares should come into the picture.

How to grow your financial capital

ASX shares have been a phenomenal tool for people to grow their financial capital. This is something I don’t believe will change any time soon. In fact, looking into the majority of  superannuation funds, you will see large allocations to shares – both Australian and international.

Your superannuation in designed to support you during retirement, while our goal is to bring retirement forward. This means investing outside of your superannuation, regularly.

Growing a large portfolio to replace your income prior to retirement may sound daunting. However, one of my fellow writers has shown here that by investing just $1,000 a month you can achieve a share portfolio of $1,000,000 in less than 24 years. Breaking it down into monthly goals is a great way to make the process more achievable.

Of course the sooner you start the better, and I believe now is a great time when you’re focusing on 10, 20 or 30 years down the road.

I would consider investments today in shares like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Vanguard FTSE Asia ex Japan Shares Index ETF (ASX: VAE) and BetaShares NASDAQ 100 ETF (ASX: NDQ).

More reading

• How to reduce your work to part-time using ASX shares
• My 3 best ASX dividend shares to buy right now
• 2 top ETFs for high growth
• 2 ASX shares I plan to hold til I’m 100
• 3 Warren Buffett ASX dividend shares to buy right now

Motley Fool contributor Michael Tonon owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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