Ask Paul: What if my super is worthless by the time I need it?


Q. More often than not you propose investing in super as a tax-planning tool.

Superannuation, like all mutual funds, invests in a range of areas, from equities to term deposits.

Is it still worth investing in super when one is not sure, after 20 or 30 years, what the balance would be on the day one needs it?

ask paul clitheroe super worthless

Markets may be in freefall during that period and effectively one's life savings would be worthless on the day monies are to be withdrawn. - Jay

A. Good question, Jay. You are right, I do see super as a tax-advantaged vehicle and I also agree that the investments we hold today may not be appropriate in decades to come. But I don't find many funds these days that restrict you to just one investment choice.

Whether you are in a self-managed, industry or retail fund, I think you will find you can easily change your asset allocation. I have done this over the decades.

My superannuation used to be in very high-growth assets until my 50s, when I moved closer to a balanced portfolio.

Now in my early 60s, I have increased the allocation to secure interest-bearing investments in my super fund.

So I would argue that super is not only highly tax advantaged but it is also flexible and can meet the level of risk that is appropriate to each of us.


Paul Clitheroe AM is a respected financial adviser and Money's founder and editorial adviser. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
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