Wealth

In finance, wealth is the total value of someone's assets minus the debts or liabilities at a given point in time. Wealth can be made up of tangible assets, such as land and capital, and more commonly, financial assets such as money and bonds. Individuals, companies, and even nations strive to own and manage their own wealth. In accounting, wealth may be referred to as a person's ‘net worth'.

Wealth can be acquired from a variety of sources, but the most common include employment income, investments, and business profit. In Australia, much of one's personal wealth comes from the superannuation fund, a retirement plan involving regular contributions over one's term of employment. Australian employers are required to make contributions on behalf of employees towards their superannuation funds.

There are also private financial institutions offering superannuation fund services. This allows self-employed and independent workers to manage their wealth and superannuation plans, even without the compulsory contributions. In this setup, the administration costs of the plan are usually shouldered by the investor, whereas the compulsory plan costs are usually paid by the employer. Each setup has its own pros and cons, and both offer excellent ways to let your money grow and manage your wealth more effectively.

How superannuation wealth funds work

Superannuation wealth funds come in three structures: self-managed super funds (SMSF), retails funds, and industry funds. The main difference between the three is in the time you will have to invest to get the most out of your wealth. The most time-consuming scheme is the SMSF, which involves managing your own wealth and spending at least two hours a day studying potential investments. This usually pays off in terms of higher yield, and for more experienced investors, a wider range of investments to choose from.

Retail and industry funds require less time, although experts recommend putting a bit more effort into retails funds. If you want fast, easy yield, industry funds are the best way to invest your superannuation wealth. The main drawback is that you don't have many investment choices, which means your wealth will be largely directed by the market rates and the status of your financial institution.

Why you need superannuation wealth funds

Besides the fact that it's required from your employer, you also need to build superannuation wealth to ensure financial stability for you and your beneficiaries. Making regular contributions allows you to continuously grow your assets. In most cases, the more wealth you have in your superannuation fund, the faster it grows and the more money you earn.