Understanding Super Terms
Aug 21, 2023
The language around superannuation can be confusing. AustralianSuper can help explain a few terms to better understand what its all about on your super journey:
Fees
A super fund is responsible for managing and investing your money. Super funds charge administration and investment fees and costs to cover the cost of these services, but not all funds charge the same or in the same way.
Retail vs Industry funds
Industry super funds are not-for-profit and return any profits to their members, whereas retail super funds return their profits to shareholders.
Net Benefit
Net benefit is your investment returns, after paying administration and investment fees and costs. When you’re comparing the performance of super funds or checking that your fund is delivering on your investments, the net benefit is an important factor to consider. In maths terms, think of it as subtraction and what the end equation is is your net benefit.
Compounding
Compounding is the process in which an asset's earnings, from either investment or interest, are reinvested to generate additional earnings over time. Consider the snowball effect - A snowball rolling down a hill may start small but grows bigger the longer it rolls.
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