Because typical super funds achieve an average result, most Australians don’t monitor their super or review its performance often enough. Most people assume their super will be ok at retirement. But will it be enough?

Industry statistics show Australians retire with an average super balance of between $250,000 and $330,000. If you are planning for 20 years of retirement, that’s $12,500 to $16,500 per year, so you’ll need to be reliant on the aged pension as well. Are you happy with that retirement plan?

For those that research their super options, research is typically limited to industry super funds. This is scenario 1 in our example chart.

In these typical super funds, growth is limited to your own money. The funds don’t loan money for investment, so growth is always based on your super balance.

That might sound normal, but it’s not the only way of doing things.

Part 1 - Property
If you own a home, you probably borrowed money to buy it. After 10 years, the wealth you’ve built is based on the growth of the property value. You’ve used (or leveraged) the bank's money to buy a property that is worth more than your deposit amount.

If you’ve held a property for more than 10 years, You’ve probably created more wealth than the average super fund at retirement ($250,000 - $330,000).

Part 2 - Super
In 2007, tax laws changed to allow borrowing for property in a super fund, and the results speak for themselves.

According to the ATO, there are 610,000 Self Managed Super Funds (SMSF) that have an average value of $1,500,000 per fund. SMSF’s are the type of fund that can hold investment property. Compare that to the average super balance at retirement of approx $330,000. That’s a big difference.

Combining 2 parts
Scenario 2 takes a stable, proven and popular wealth creation process (Property), and puts it inside a super fund.

This isn’t some mysterious trick only for the wealthy. It’s a simple idea that’s already being used by many Australians. If you take time to learn about it, you at least have the power to make the choice for yourself. If you don’t know what your options are, you have less opportunities for a better retirement.

In the comparison chart, both super investments have the same:

We’ve made this an apples for apples comparison to remove the complexity and focus on the most powerful aspect to owning property in super - growth on a bank funded property.

In Scenario 1 - the ‘Super Balance’ column shows a 7% annual growth rate, based on the start balance of $250,000 in the super fund.

In Scenario 2 - the $250,000 that you have in super is used as an initial deposit for a $550,000 property. So the 7% annual growth rate applies to the property - not the deposit amount.

The ‘Property Value’ column shows the value of the property based on a 7% annual growth rate.

The ‘Property Equity’ column makes the assumption that the mortgage ($300,000) stays the same and is not paid off, so it’s only considering the difference between the new property value and the initial $250,000 each year.

The Comparison
In this example, after 10 years the super balance on the typical investment is $459,615, yet the property equity result is much higher at $711,153. There is no magic to this. It’s the simple power of using leverage (the banks money) to get the growth benefit on a $550,000 asset, instead of growth on a $250,000 asset.

However…
Everyone’s situation is different, but any of the following points could dramatically increase or decrease the actual result:

Your Scenario 1 

If you're not happy with that, you might have time to make choices now to improve your outcome.

​PS - If you’re wondering why the average Australian super balance of $330,000 is lower than the balance of $459,615 in our example chart, it could be because:

Your scenario 2

The Comparison