#315 - Your Super Won't Make You Rich. This Will.

Your super won't make you rich. And if you're counting on it to fund your retirement, you're setting yourself up for a massive disappointment. I know that's not what you've been told. The government tells you to contribute more. The banks tell you it's your safety net. The financial advisors tell you it's the smartest thing you can do. They're wrong. The truth is your super is locked away for decades. It's taxed. It's restricted.

And even if you max out your contributions, the average Australian retires with less than $400,000. It's not wealth that's barely enough to survive. So the question becomes, what are some other options that can increase your income by 50%, 100%, 300% on top of your super? Something you control, something that compounds faster

than any super fund. ever will. And in this video, I'm going to show you exactly what it is, why your super won't make you rich, and what you should be doing instead of to build real wealth that you can actually use. So firstly, what is super designed to do? What is it? Most people have no flippin idea what superannuation is. Most people think it's a big bowl of soup money that they send away over 40 years, and then when they turn 65, boom,

Where's my money you're going to send me? They don't understand that it's actually cash that their employee contributes to a fund and the fund invests in assets. Assets including stocks, mainly stocks. It's in property. It's in infrastructure. It's in private equity. It can be in bonds, of course, a lot of bonds. It can be in cash sometimes. So it's the value of the assets that the super fund buys. and

their ability to compound, that actually can build wealth. The challenge with it is you don't know where it is. You don't know who's managing it, how much it costs per year, what the performance is, and whether it's locked away in low-risk bonds and it's not going to compound for you. So it's very uncertain to know how well it's going to compound. And the challenge is, too, that the contributions probably aren't enough for it to be life-changing wealth creation. but

it's not bad, it's a forced savings vehicle. I actually think superannuation is great for people who need to put away

because Australians can't be trusted with money management from what I've seen, right? So it's a forced savings vehicle and employers contribute like 11.5%. So it's a whole pay yourself first mentality put away into a tax effective vehicle, all right? It's legislated, it's structured, it's consistent. So over decades in a nice portfolio, it can compound, it will compound. And historically, you know, super funds have returned somewhere in the middle digits,

right? Depending on what it owns. It's solid. And it's designed to provide some buffer in retirement to replace some of your, well, a few years of your wage. And it's to alleviate the reliance on the age pension. It was never designed to make you wealthy. It was designed to make sure that you have something at the end and to alleviate the exposure of the age pension. And by all accounts on those reasons, it's effective. So I'm for it for those reasons. Okay. However,

it's designed more for preservation than wealth creation. Okay.

So can it also create acceleration? Right. So let's look at some of the logic around it. If someone earns 80,000 a year, for example, and superannuation contributions to say, you know, for arbitrary sakes, 11%, that's roughly about 9,000 annually before tax. So $9,000 before it's taxed, it goes in there, but it's also taxed at still a lower rate, but it's still taxed, okay? Then over 30 to 35 years, it compounds at a tax-free rate,

right? So it will grow tax-free. That's where the benefit is. It's actually a tax shield. Superannuation is not a big bowl of super money. It's a tax legislation, okay? However, By the time you access it at 60 plus and 65 plus, you don't have any active working, you have less active working years left. So you've actually traded decades of time, right? And it more aims

at you being comfortable than wealthy. And you've missed the ability to take the 11% that you would have had in your own pocket and

do things like build businesses, buy growth oriented assets. and skill up, investing in yourself, et cetera. And all that, it disappears over that timeframe, right? And so you get to that age and you've lost the chance to build freedom for yourself, all right? So if your goal is to retire comfortably, fine, you'll be able to do some stuff, but to live freely, it ain't going to happen, right? And so here's the real limitation. It's more of a structural issue. Look,

it locks your capital away. That's the challenge. And you can't access it easily or at all, depending on what policy you have before the age of 60 or 65. So whilst it grows, it doesn't give you any options. Optionality is a huge asset. It's not just about net worth, it's about optionality. It's being able to walk away from a job that you hate, toxic environment. It's about taking a risk, starting a business, taking time off, traveling, investing in opportunities that

arise over time that super doesn't fund. It's income and accessible, it's cashflow. And all that optionality disappears. So what good is a large balance at 65 if you were financially stressed for 35 years? Does that make sense? What

does create wealth? Let's shift it. If super and you know it won't make you rich, what will? And there are three things. One, increasing your income. So for example, if I focus less on my super and more on my skills to increase my income and I double my income from $80,000 to $160,000, that is going to do a lot more for you. Okay.

Second thing, owning productive assets outside super. For example, if you bought a laundromat, I'm just saying it as an example, I own one, but it's a 40% return on money and it will compound and grow in value and give you a lot of freedom and choice long before super. In fact, you'll probably find it to give it to you in about five or six years. Okay. And so there's those opportunities outside super that you may not be able to get because you have no cash left. And they don't take a

lot of cash down either. But if you have had that superannuation, that $9,000, perhaps you could have bought something like that, right? Now, I'm not saying all are the same. I had a student of mine did the same when he bought a gym. And I think to myself, that was a great decision. He bought a gym. It's basically giving him a level of freedom outside his job. and it wasn't super that did that. Just quickly, if you're ready to take control of your finances but feel

stuck on where to start, I have a solution. My book, Money Buys Happiness, simplifies investing and wealth building with practical steps to help you achieve financial peace. Get your copy via the link in the show notes and let's get your money working for you. Now back to the episode. So owning productive assets outside super is how you do it. And third thing, building scalable

cash flow. So that means that you would want to be able to invest in assets like that, as well as certain stocks that provide, even in Australia here, tax-free dividends through imputation credits. You can do that so you can actually build assets outside super that also retire you long before 65. And that's the position that I'm in. So I've done all three of those things. And I sit here

today to tell you that just on our assets alone, my wife, Alicia, and I, we don't have to work, but I enjoy working. I like to work on things that I like to work on, whether it be writing books, creative content, teaching, helping events. building businesses. I love doing that. It's great fun, right? And it's great for other people too. But I'm in a position where I don't have to depend on any super. Just why don't worry about it. And

I'm 42. And I'm really glad that I didn't just go through life with the notion that, oh, it's OK, I'm just going to fall back on my super at 65. I don't give a rat about super. I just don't care. Because I've built freedom already at 42 instead of banking on someone else managing my money until 65 and then coming out with 400K. That just, to me, was not a way to live life. I wanted to live life better earlier. I wanted to go skiing

in Japan when I wanted. I wanted to work in areas I wanted to work in. I wanted to work with people I enjoy working with. I wanted to have optionality. And so I decided that I wasn't going to bank on super. I was going to bank on my own skills, my own ambition and buy productive assets outside super and build scalable cashflow. And now we have it. And so without too much more effort, that'll scale far beyond what a super fund can scale to. You are your best asset. You are your best

investment. there are far superior ways to building wealth than just superannuation, right? So increasing income is effective. It's the biggest wealth lever that you can pull. It's got earnings power, you can double your income, you can quadruple your income, right? I've got friends of mine that have 10 extra income, right? It allows you better capacity to invest more, to acquire assets, to build better buffers. Right. It will just do so much for you then banking on super. So I think that's

the biggest lever you can pull. Right. If you can then take that and own productive assets outside super

long before the age of 65, there'll be shares, businesses, property, equity, and private ventures. It'll amplify your income again and again and again, but give you superior assets that compound far beyond 10% as well. Right. They're more, they are still liquid. They're strategic. They're accessible. You can touch them. You can sell them. You can do all sorts of things. Right. And of course, being able to develop those smaller incomes,

it just will create so much more for you. Like when I first created a network marketing side hustle, that's brought into my wife and I over $2 million in profits. And that's far better than superannuation,

right? In fact, it as an asset is superior to superannuation, period. Okay? You've got to look at where people have built wealth. It's entrepreneurs, it's business owners, it's equity holders. They didn't get rich through retirement funds. They got rich through ownership of businesses, equity, scalable systems, investing in themselves, skills, and assets that grow way beyond

their labor and time. and they become super passive. So ownership is superior and active ownership is where you get outsized returns. So if the wealthiest people built businesses and

assets and got equity and became owners, why would you solely rely on a retirement vehicle? Now, I'm not saying ignore it completely like I do, but I'm saying if you're going to have it, of Of course, if you're in a job, in a wage job, you still wanna maximize your pull-in contributions, you still wanna optimize your fees, you still wanna choose appropriate allocations to make sure it compounds effectively, right? But understand its role. It's a safety net. It's not

a trampoline, all right? If you wanna build real wealth, income. Invest outside super, develop skills, take calculated risks, and own equity. That is the path. That's the part. And it seems riskier, but I actually contend to say that the other path of comfort that everyone else is doing is far riskier, right? Who's to say people will even have jobs in the next 10 years to contribute to their super because AI might take it because they didn't invest in their own skills.

They didn't buy it and build a business. The best thing to do is control your own income. You can't do it if you're working for someone. I think that's the biggest risk. But for some reason, maybe it's because of all the fees they generate, superannuation funds

and banks have seduced you into thinking that you're going to be okay with super. And the fact is with 400k, you ain't, right? You're just not, especially if inflation is running at 10%. So your super will probably take care a little bit of your retirement, but it'll definitely keep you comfortable. And that's where you will go to die, right? It

will not make you rich. So please focus on ownership, income growth, scalable assets, outside super, strategic investing, long-term discipline, and business building, right? That's where it's gonna come from, amplifying your income, right? Because if you want freedom before 60, you need a different strategy, you need something else. So comment below, do you think that super is enough or are you building wealth outside of it, right?

If you want frameworks that focus on ownership, income, and real financial freedom, hit the subscribe button, Stay smart. See you in the next episode. Thanks for listening to Money Grows on Trees. If you enjoyed the episode, leave a five-star review on Apple Podcasts and Spotify and subscribe

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