Investing in super vs Pearler ETFs

Hi Mary.

Super is a very tax efficient place to invest, so it can make a lot of sense for long term investing where you don’t have any desire to have access to the money for a long time.

But this depends on your age. Someone in their 20s may not like the idea of putting extra money into super where they can’t get it for 40 years. They might be better off investing outside super so they can benefit from the gains and passive income to get more freedom in their life sooner. Other people, say in their 50s, are much better placed to get the benefits of super while not having to wait such a long time to have access to the income/gains of the investments.

It’s worth noting that due to the capital gains tax discount, long term investors are likely to only pay up to 25% tax on long term capital gains, not 50%. Thought it’s often much less than this in reality since the entire investment is not capital gains, but savings added over time. You’re correct that super is more tax efficient overall, so the real decision comes down to how important it is to have access to the money, which usually depends on someone’s age and goals.

Hope that helps

I agree with you Mary. I am thinking it is even better to invest more than the $27500 concessional contributions cap and be taxed at my marginal rate instead of the super 15% as if i put the money into an ETF i would be taxed at my marginal rate anyway and then at my marginal rate for any capital gains (less the CGT discount) and also for dividends. Of course you cant access the Super until your preservation age (60 for me and am 54 now). I do also invest some in ETFs outside of super too. What do others think?