Briefly Describe the Purpose of a Superannuation Fund

2. Briefly describe the purpose of a superannuation fund.

In Australia, the government popularizes the superannuation fund for several years. Their plan is let         Australian citizens have enough money so that for encouraging them to save for their own retirement. In order to make sure those Australian retirees can be self-sufficient.  

Superannuation is a long-term savings arrangement. First, part of salaries will be put into the superannuation fund; it will be preserved until people retire. People, who on behalf of others may affect superannuation funds, like employers, self-employed people, employees and family members.

As a part of pushing the plan, it is compulsory for employers to contribute their money. At present, employers need use 9 percent of gross salary or wages as superannuation funds. “And the complying superannuation fund complies with all the requirements of the Superannuation Industry (Supervision) Act 1993(Cth) (the SIS Act).Regulated complying funds receive concessional tax treatment.”(Valentine, Ford & Sundmacher 2010) 

Superannuation fund is a trust estate which type created by people’s faith so that can holding and investing members' superannuation.

The superannuation fund holds for the members and invests the contributions to increase its value. At last use it to make benefits to members when they retire.

3. Describe the features and the important characteristics of each of the asset classes in Table One. (ie. Australian and international shares, property, bonds and cash). Use your results from Question 1 to illustrate.

The important characteristics of Australian and International shares are that each share represents equity ownership in a company which often referred to as equity capital. “Every shareholder is put in an equal ownership position and can participate in the company’s earnings and dividends, an equal vote and voice. The most important is that the ordinary shares have no maturity date.” (Valentine, Ford & Sundmacher 2010)

 Compare Australian shares and International shares, The Australian shares’ annual nominal returns ranged from a low of -40.4 %( 2008) to a high of 45.4 %( 1993). And the International shares which annual return between -26.9% in 2002 and 41.7% in 1997. Based on the data of International shares, the Australian shares moved up and down violently. Then the Australian shares provided average annual return of around 12.95% and the existed risk is 19.09% over the 20 years period 1991-2010. According to the International shares, it showed the average nominal annual return about 7.66% and also the risk was 17.56% above 20 years. It means that for a long time period, the investor who in Australian market can earn more money than that people in the other countries’ markets. But people also need to be cautious that they may take more risk than others.