ETF or More Super?

[automatiic]

I’m 25 y/o, earning about $90k p/y and currently have $43k ($29k transferred from REST) sitting in my high growth Triple S super. With my current role I have to make a voluntary contribution towards super which I have chosen 5.3% before tax instead of 4.5% after tax.

I’m planning on either investing into an ETF (IOO or IOZ) or increasing my voluntary contribution to super, which would be the wiser?

 

[resjudicata]

@automatiic Super because of the tax breaks 100%. When you are maxing out your voluntary contribution then look at other investment options.

 

[tbvsthienloc2020]

@resjudicata Completely disregarding if OP wants to use his money before he retires?

 

[resjudicata]

@tbvsthienloc2020 What money

 

[3esp6]

@tbvsthienloc2020 Saving money by minimising taxes OP pays via salary sacrificing to super would help do that though? He has to salary sacrifice less to get the same level of investment he wants.

 

[somethingon]

@automatiic What do you mean that you 'have to' make a voluntary super contribution. Who is forcing you to do that?

 

[automatiic]

@somethingon As part of my employment I understand, I have two choices with my super before tax or after tax. I make an extra compulsory payment on top of the guaranteed super

 

[somethingon]

@automatiic That's an unusual contract. Normally extra super is your choice.

 

[juliusgulius18]

@somethingon Some employers will match your voluntary contribution, maybe this is what op is getting

 

[hjb]

@juliusgulius18 Thats voluntary

 

[chris4040]

@automatiic You have four choices for your super payments:

1. Instruct your employer to pay part of your pre tax pay into your super account
2. Top up post tax then at end of financial year file a notice of intent to claim a tax deduction (getting the benefit of 1)
3. Top up post tax and lose any deduction benefit
4. Put your money elsewhere

If you have enough buffer in your budget, 1 is the easiest. 2 allows you to catch up on carry forward amounts to your concessional cap.

 

[automatiic]

@chris4040 Thanks for simplifying it, I have the excess funds just didn’t know if super or ETF was better

 

[chris4040]

@automatiic At your age I'd prioritise the tax benefits of super, then dip a toe in to ETFs.

You're well ahead of where I was at your age in terms of your super balance and the questions you're asking, keep at it

 

[automatiic]

@chris4040 Thanks for the kind words, it’s a tough decision choosing what to do with excess funds:

1. Extra on the mortgage
2. Super
3. Invest
4. Travel

 

[kijani]

@automatiic I invest extra in both. Super for extra retirement funds after 60. Outside of super to allow me to retire earlier if I want to.

 

[kingrandyharts]

@automatiic ETFs if you want the chance to retire early, Super if you want the tax benefits and don't foresee needing the money in the next 40 years.

 

[bluesky2023]

@kingrandyharts This is poor advice. To retire early the most effective strategy is a combination of super and outside super investments. Mathematically getting super investments in place first (to fund post 60 life) as they compound better in low tax environment. After this start saving outside super to fund retirement to 60 living.

 

[keykeeper]

@bluesky2023 Exactly. Super is part of FIRE, the after 60 part.

 

[mishe2009]

@automatiic Do you own PPOR yet? That will be your best form of super.

 

[automatiic]

@mishe2009 Yeah my wife and I have a home, currently 80% LVR and paying down the minimum payment.