Deciding where to put your hard-earned savings when you’re young can be a tricky decision.
I would lean away from extra super contributions at your age because the funds are locked up for a very long time, and you have a lot of living to do between now and retirement.
This leaves saving for your first home. Australia’s tax and financial system is very much biased towards home ownership, so the sooner you can get onto this ladder, likely the better off you will be eventually.I’m in my 40s and with one of the large super funds. I’m currently in their high-growth option, with a fee of 0.78 per cent. They’ve recently introduced an indexed high-growth option with a 0.1 per cent fee.
Armed with this piece of information, it’s easy to conclude that the index investment option would be the way to go, particularly given its lower fee.However, you’ve identified a very pertinent point. While an index approach appears to be the appropriate approach for exposure to large-cap equities, the investment universe is far wider than just this asset class.
While it’s always the case that past returns may bear no relationship to future outcomes, we do have a reference point for your question in Hostplus, which has run an Indexed Balanced option for many years.
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