Investment experts warned Australians of the high cost of diving into their super after it was revealed that more than 600,000 had already signed up to draw up to $ 20,000.
The federal government has made retirement funds available to those whose incomes have been left in doubt following the shutdown of the coronavirus and the economic crisis that followed.
Under this program, people affected by the epidemic can recover $ 10,000 from their super exercise and $ 10,000 12 months later, with 617,800 fund members registering for withdrawal so far, according to the Australian Taxation Office.
25-year-old man withdrawing $ 20,000 over the next two years risks missing more than $ 200,000 at age 65, based on a standard compound interest rate of 6%, said Julia Lee, chief investment officer from Burman.
“Don’t make long-term decisions based on short-term factors,” she told news.com.au.
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“The whole idea of the retirement pension is the beauty of the composition over time, which means you have time to work in your favor for a long-term investment.
“This whole premise disappears if you sell at the lowest of the market, near the lowest of the market, or whenever there is a panic in the market.”
Lee said that a huge segment of the population desperately wanted income relief given the destructive impact of the pandemic on industries and jobs.
But she urged those struggling to make ends meet to exhaust other channels such as the government’s massive $ 130 billion JobKeeper program or its Jobseeker initiative.
The Australian stock market has plunged more than 20% since the deadly virus seized supply chains and trade conditions.
This means that those who take advantage of their super profit while the market is low, defying one of the first investment rules.
The huge drop in super funds will also weigh on all Australians by devaluing investment institutions and there are now fears that the number of Australians participating in their retirement will be much higher than the government originally planned.
“The sheer number of redemptions from super funds presents a challenge,” said Ms. Lee. “If they don’t have enough cash, it means they will have to sell assets.
“The impact on the stock market depends on the assets they sell, but generally the sellers push the price down, so when you have these big institutions like super-funds selling in bulk, it will drive down the value of the markets. “
The stock market return is expected to occur later than expected, but DNR Capital’s chief investment officer, Jamie Nicol, said the withdrawal from the market would significantly reduce the prospect of profiting from any increase in value.
“Selling your super in a moderate market means that many will see the falls and miss the recovery,” he told news.com.au.
“In the long run, they will have less savings and more dependence on government pensions.
“This also has potential consequences for all super-holders since some pension funds with many cashed members will be forced to sell assets at potentially inflammatory selling prices.”
HOW THE JOBKEEPER PACKAGE WORKS
The money will not go directly to eligible workers – instead, employers will pay their staff and be reimbursed by the government.
The first ATO payments will be received by employers in the first week of May, but they will be backdated to the date of the plan announcement in late March, which means that people will initially receive a lump sum of one month’s payment.
Under this program, workers with reduced hours will be able to request time for a second job.
Companies will be able to reduce the hours of work of their employees so that their income corresponds to the JobKeeper payment of $ 1,500 per fortnight, as long as there is not enough work available for them in their normal role.
AM I ELIGIBLE?
There are a number of check boxes before you are eligible to receive payments.
You must be currently employed or have been on March 1 of this year, including those who have been laid off since and rehired.
Eligibility ranges from full-time workers to part-time and casual workers, but you must have been employed for at least 12 months. And payments are only available to Australian citizens or selected work visa holders.
You can only get JobKeeper payments from one employer and you cannot get Jobseeker payments on top of that.
However, if you have already applied for a jobseeker’s allowance, don’t worry. The Australian Taxation Office will review the requests and determine the category to which you belong.