Advantages of superannuation funds
- You have experts doing the hard work for
- There are many superannuation funds to
- For many superannuation funds, you can
set up a regular savings programme and make lump-sum payments.
- Your resources are pooled with other investors,
allowing you to make investments impossible for an individual
- It helps you to easily diversify your investments.
- You get the benefits of greater economies
of scale, such as reduced transaction costs.
- Having your savings locked for a predefined
period may be an attractive benefit for those people who may
be tempted to "dip" into their retirement fund.
Disadvantages of superannuation funds
- The majority of your savings will be locked
for a predefined period.
- Your family and lifestyle will most certainly
change over the years; yet there's little flexibility in a superannuation
fund to match such changes.
- If this is your only investment vehicle,
you won't have any diversification across fund managers.
- The funds will be tax inefficient for those
on a marginal tax rate of less than 33%.
- There are costs over and above those you'd
pay if you were investing directly.