How to cope with the super blowout

NOW that most of us have "enjoyed'' a negative superannuation return for the past year, what can we do about it?

How to cope with the super blowout

NOW that most of us have  "enjoyed'' a negative superannuation return for the past year, what can we do about it?

The important thing with superannuation is to distinguish between what things can be changed and what can't.

The elements of super that are effectively fixed include when you can get your hands on it, how much tax you pay on it and often the minimum amount you must pay into it each year.

That still leaves a lot of variables, including who manages your super, how much they charge for that task, where the money is invested and whether you should salary sacrifice more money into this retirement vehicle.

Despite most Australians having the freedom to choose which superannuation manager they use, the vast majority have been reluctant to stray too far from the status quo. Which is usually either an industry fund or a fund manager chosen by their employer.

What yesterday's SuperRatings figures showed is that such apathy towards who manages your super can be very dangerous to your future wealth.

With the gap between the best and worst-performed balanced fund over a 10-year period reaching 5.56 per cent a year, that represents a whopping 68 per cent difference between two people who invested the same amount over a decade.

That should be enough to convince anyone of the merits of spending a bit of time at least making sure that your super manager is one of the better long-term performers.

The next thing that super investors can manage is which assets their superannuation is invested in.

Most funds have a broad range of categories including the default balanced fund and others with names such as growth, aggressive, Australian shares, international shares, property, capital stable.

The key here is to match the individual's risk tolerance with the right category -- a task that someone like a financial planner can help with.

In general terms though, the younger the person putting money into superannuation, the greater the proportion they can afford to allocate to assets classes with higher rewards and higher risks.

Which brings us to the big question about salary sacrifice.

Here most people fall into the glass half-full or half-empty approach.

With returns in the red, some people must feel like they are throwing good money after bad by putting extra pre-tax income into their account each week.

Others might prefer to think they are getting a bargain by buying more investments for their money while there is a sale on.

Historically, those who have held their nerve and kept investing through the tough times and the good have been amply rewarded for that approach