Barefoot Investor: It pays to be vigilant when it comes to super

ARE you being ripped off by your employer, without even knowing it? Your pay slip is about as genuine as the pre-printed message in a Hallmark sympathy card, writes the Barefoot Investor, so instead, trust your super statement.

ARE you being ripped off by your employer, without even knowing it?

Here’s you: “Nah, I work for a big organisation … they’re totally legit … it’d never happen to me.”

Here’s me: “Think again.”

Chris works for a university, and after he read my book and started making a few inquiries at his work, he stumbled on to a $3.66 million “glitch”.

Here it is, in his own words:

“Thank you a thousand times for your book and for giving me the tools to understand and control my super. I contacted payroll to check my super and, lo and behold, I was being underpaid! There was a quick scramble and I got my payout (not a small amount, too).

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“I went on my merry way and advised my colleagues to also take a close look at their super. But now it’s making the news. You might have seen a debacle recently about a university underpaying staff super to the tune of $3.66 million. I am utterly shocked, as I think it might have been me who triggered the investigation.

“If not for you, I would not have got the super I deserved. And if it is true that I played a part in triggering this big investigation, then thousands of other people are also in your debt.”

Crikey! Now, of course, mistakes do happen — it’s just that we all prefer them when they go in our favour.

(“Darren, I have terrible news. Sharon from payroll is on meth, and she’s been overpaying you by $78 a week. Jittery fingers, we presume.” That’s a good problem to have unless you’re Sharon.)

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When you’re bored one day at work, call your super fund and request a statement. Then check that you’ve been paid, and paid the correct amount.

But it’s more likely they won’t go in our favour. Worse still, some people don’t just get underpaid by their employer, they get robbed.

Seriously, in 2014-15 Australian employers failed to pay a combined $2.85 billion into their employees’ super accounts.

And I can guarantee you two things:

First, most of those employees had absolutely no idea they’d been robbed … which could end up penalising them tens of thousands of dollars over time due to lost compound interest.

Second, almost every one of them got a pay slip saying they had been paid their super.

So what’s the lesson?

Don’t trust your pay slip. It’s about as genuine as the pre-printed message in a Hallmark sympathy card.

Instead, trust your super statement.

So this week I want you to do me a favour.

When you’re bored one day at work (every day at 3pm), instead of stalking your ex on Instagram, call your super fund and request a statement. Then check that you’ve been paid, and paid the correct amount.

Tread Your Own Path!

Millennials should make sure they should take some ‘boring’ financial steps to ensure a bright future.

CASEY ASKS: I am 25 and have just purchased a house with my fiance, so we now have a mortgage.

We would also like to invest some of the money we have saved up but are unsure whether to purchase property or stocks.

We have friends who are strongly recommending we invest in a company called Afterpay. What would you recommend?

BAREFOOT REPLIES: Afterpay Touch Group shares are hot! (Afterpay touts itself to teens with enticing slogans.)

The share price of this millennial lending outfit is up eight times since 2015.

Depending on who you ask, Afterpay is either the future of retail for millennials that will take over the world, or a cuter, unregulated version of “buy now pay later” that’s been around since Gerry Harvey was wearing bell-bottoms.

So which is it?

Honestly, I have no idea.

After all, Afterpay has only been in business a few years, and it’s yet to make a profit.

And I don’t invest in businesses that don’t make profits.

Boring, I know. But how can I value something that hasn’t yet made a profit?

How can I have any idea how much it might make in the future?

So I suggest you do a couple of “boring’’ things that you’ll never regret: invest long term by boosting your pre-tax super contributions to 15 per cent of your income (up to the $25,000 cap).

Then start saving for your wedding, so you don’t have to resort to Afterpay — because those late fees are a total rip-off, right?

A LOTTO TO CONSIDER

TAMMY ASKS: A family member had a Gold Lotto win and as a family we have received $140,000, that is, $100,000 for me (single parent) and $20,000 for each of my two children. I have $115,000 left to pay on my mortgage.

My children are 17 and 19 so I want to invest their money in the best way possible to set them up down the track. I am thinking the best option is to pool our money and invest in an investment property. Can you please offer advice?

BAREFOOT REPLIES: Congratulations! But …

The best option is not to pool your money with your children and invest. That’s not even close to being the best option. If I were in your shoes, I’d pay down your mortgage (so long as you don’t have any other debts), and then work your whipper-snipper off to be debt free by the end of the year!

You don’t want to invest in something that’s hard to sell quickly, and that’s expensive to maintain and manage, with your teenage kids.

Instead, I’d give them a copy of my book and get them to set up their buckets and start saving for a house deposit.

If they have around 10 years before they think they’ll buy, they can stick it in a low-cost share fund. If they plan to do it earlier, they should keep it in a high-interest online saver account.

DEBT HARD TO CREDIT

ERIN ASKS: When you are in serious debt (and I am talking mor than $100,000 in credit card debt) and you just cannot get ahead, is it an option to clear it all from your super fund and start again?

The level of debt is a major cause of stress in my life right now, even though I am an outwardly successful 50-year-old woman earning $200,000 a year.

I am very distressed.

Please help.

BAREFOOT REPLIES: It sounds to me like you could be in the grips of some sort of addiction.

Most people who earn 200 grand a year don’t have six-figure credit card debts they can’t repay.

Regardless, you won’t be able to access your super.

To do that you need to have received Centrelink support payments for a continuous 26 weeks and be able to prove you’re unable to meet day-to-day living expenses. You need to get to the root of the problem, or your financial symptoms will continue.

So, I’d like you to call a free, not-for-profit financial counsellor on 1800 007 007 to support you through this.

Credit card debt can be crippling for many people.

FINANCIAL FREEDOM

CHLOE WRITES: I read your book 15 months ago and — as of last Friday — I have paid off my three credit cards.

I’m free of credit card debt for the first time in 11 years!

My partner and I still have a car loan and a mortgage, but it has been so nice just paying for everything in cash.

When I was asked by the lady at the bank why I wanted to close the credit card account, I told her I had read your book and did not want the debt anymore.

She said I was the seventh customer to say your name to her that day.

Thanks for the valuable advice on reaching financial freedom!

BAREFOOT REPLIES: Well done!

I know a lot of staff working in bank branches who are under a lot of pressure to hit sales targets.

It can be a really depressing job when you’re flogging product all day.

However, I also know that most of them are really good, caring people who genuinely want to see customers doing well.

So you just might have made her day.

The Barefoot Investor holds an Australian Financial Services Licence (302081).
This is general advice only. It should not replace individual, independent, personal financial advice.

The Barefoot Investor: The Only Money Guide You’ll Ever Need
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