Vanguard Super

Vanguard Super Australia Review: Should you switch ?

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probably definitely know who Vanguard is Vanguard is known as the king of low-cost investing and is perfect for those investors who are looking to buy and hold for a long period of time.

Which is why when they announced that they were coming down to Australia to launch their own superannuation fund this got a lot of people excited.

This is because of vanguard’s track record of offering low fee products and people are expecting Vanguard to come in and undercut all of the other super

funds providing a very competitive superannuation offering.

Vanguard has even since claimed that their fees are the lowest in the Australian superannuation market for member balances under fifty thousand dollars and for members aged 47 years and under.

Vanguard has also claimed it charges the lowest fees amongst the superannuation industry charging just 0.58 percent and for both their investment and administration fees combined.

Well in this article we’re going to do a full breakdown of vanguard super offering to help better inform you and to help you and your decision process to figure out whether or not it’s a good place for your retirement savings

Vanguard Super Australia Offerings

So first off Vanguard Super Offerings let’s do a full breakdown of vanguard super offering Vanguard has 12 different investment options available which I categorized into 1. life cycle 2. Diversified 3. single sector options

  • Vanguard’s life cycle option is a diversified investment option that has a dynamic asset class that essentially automatically adjusts the asset allocation Mission depending on your age under the age of 47 you’ll be invested into an asset allocation of 90% growth and 10% defensive assets. And then as you need retirement your asset allocation will slowly shift towards being more defensive so for example when you’re 55 the asset makes or shift to 72% growth and 28% defensive and then when you’re 60 it will become 60% growth and 40% defensive.
  • Vanguard’s Diversified options are essentially Diversified portfolios made up of vanguard’s index tracking ETFs they provide several different investment options depending on your risk appetite and investing preferences ranging from high growth ethically conscious growth balanced and conservative.
  • Vanguard’s single sector options are a broad portfolio of passive index tracking ETFs these include Australian shares International shares fixed interest and cash options as an investor you can choose one of these options or a combination.

Vanguard Fees

 Vanguard made fees very transparent for you as an individual investor to understand how much in terms of fees you’ll be charged for each of the different investment options which I can’t say is the same for all the other super funds out there in the market.

On their website they’ve clearly broken down the yearly fees that you’d be paying with all of their investment options that we just discussed previously.

Now vanguard’s yearly fee is made up of an investment fee transaction fee and an admin fee as well and at a maximum they will be charging you 0.58 per annum and with some investment options coming in slightly lower at 0.56 percent the cost that you incur on a yearly basis will essentially be taking that fee and multiplying your total super balance.

So for a $50000 balance you’ll pay 290 dollars in fees per year and on a $100000 superannuation balance you’ll pay $580 in fees.

Now it is important to note that the administration fee won’t be charged for super balances above $850000 so there will be some economies of scale when it comes to fees but that really only applies to those much later in life with large superannuation balances.

Now when we begin to dive deeper into the fees Associated to the different investment options offered by Vanguard we can begin to see why some people aren’t really impressed with vanguard’s offerings.

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If we take a look at vanguard’s single sector investment options besides cash all of these investment options have a 0.58 per annum fee.

Now reading through vanguard’s product disclosure statement I was able to find that the Australian shares investment option tracks the ASX 300 index which is the same index tracked by vanguard’s Bas ETF.

However management fee comes in at only 0.1 per annum meaning that the superannuation offering is nearly six times more expensive for the same product.

 If we take a look at the international shares investment option in the product disclosure statement it tells us that it seats to match the msci world excluding Australian index which is equivalent to their vgs ETF.

However that one only comes with a 0.18 management fee so once again it’s almost three times more expensive for the superannuation equivalent and this is a common theme that we’ll find if we compare all the various different investment options offered by Vanguard super compared to their retail equivalent.

Their International shares hedged is equivalent to vgad and their fixed interest offering is equivalent to vaf all of which are more cheaper with the retail offerings.

On top of this the underlying funds are actually invested into vanguard’s wholesale funds and not their retail funds which are actually highly tax inefficient.

vanguard’s wholesale funds actually distributes capital gains from withdrawals to all all unit holders rather than the individual who’s withdrawing which oftentimes results in an ugly tax bill come tax time.

So now that we’ve done an overview of vanguard super Australia offering and the fees Associated to Super Comparison.

You can watch this video to have a sort of good knowledge about Vanguard Super

Super Comparison

Let’s do a comparison to some other superannuation products out there just to see how it all Compares.

Now if we take a look at

  • Vanguard’s Diversified balance option it’s made up of 50% defensive assets and 50% growth assets from equities from Australia International and Emerging Markets.

Let’s compare that to some other balance options from other well-known super funds such as Australian super we can see that

  • Australian super’s balance option is made up of roughly 20% defensive assets and then 80% growth assets but the key difference is the type of growth assets that Australian super invests into because it includes things like private Equity infrastructure and property.

And on top of this Vanguard is actually an actively managed super fund meaning there’s fund managers working behind the scenes to figure out what actual asset classes you’re going to be investing into.

Because we aren’t comparing Apples to Apples now in reality when comparing different super funds against one another it your seldom going to get an apples to Apple’s comparison.

Because there’s always going to be some differences between the two but there are definitely more comparable options that we can compare Vanguard super against to give us a better idea as to whether or not Vanguard super is worth it or not.

So let’s take a look at two different options the first one is

Host pluses index balanced option

1. Host pluses index balanced option which is a passively managed index tracking investment option that is made up of 25% defensive assets and 75% growth assets similar to Vanguard.

It doesn’t invest into any infrastructure property or private Equity rather it is 100 invested into equities from around the world so size from the different allocation between the two super funds the actual assets that both super funds invest into are actually quite similar allowing us to make a better comparison between the two.

Next let’s take a look at the costs associated to host Plus’s index balance option which comes in at just 0.05 per annum plus an admin fee which when compared to vanguards seems significantly cheaper.

2. Now in the second example let’s look at rests in next balanced option once again this is a passively managed index tracking investment option making it similar to vanguards the asset allocation of this portfolio is 25% defensive and 75% growth with all the growth assets coming from equities from Australia and overseas.

So once again while the asset allocation is different between Vanguard and rest the actual assets that both super funds invest into are quite similar allowing us to make a relatively comparable comparison the cost of this investment option will Believe It or Not comes in at zero percent per annum for both the investment transaction and performance fees.

And all you have to pay is the admin fee which comes in at 1.50 per week and then 0.11 per annum of your total account balance each and every single year meaning once again the investment option offered by rest seems to be cheaper than the one offered by Vanguard.

You can visit Vanguard Australia’s Official Website to research it by your own and All the data given in this article is taken from this official website only.

Conclusion

There was a lot of hype initially about vanguard super offering because of the possibility of them undercutting all the other players out there and providing a very competitive product.

The actual offerings that they launched didn’t really meet expectations now I think this was now I think this was always to be expected because there’s significant overheads surrounding a superannuation fund and they just don’t have the economies upscale yet to compete with the other super funds out there who have been around for decades and decades.

Vanguard have actually stated themselves that they actually didn’t expect to be the most competitive offering out there on the market from the get-go but over time they will be looking to reduce their fees and be more competitive as they grow in size and get more economies of scale.

So am I switching my super over as a Vanguard probably not but I will be keeping an eye on them who knows maybe in the future I might swap but today I probably will not.

Ok so if you have learnt anything new so please shower your love by sharing this Article to your family or friends whoever needs it.

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What is Vanguard super?

A superannuation fund called Vanguard super is run by Vanguard Australia. Global investment management firm Vanguard is well-known for its inexpensive, index-based investing options.

Who can open a Vanguard super account?

A Vanguard super account can be opened by anyone. As an individual, a couple, or a family, you can open an account.

How much can I contribute to Vanguard super?

The amount you can contribute to Vanguard super depends on your age and income. The maximum contribution for most people is $27,500 per year.

How can I withdraw money from Vanguard super?

When you retire, you can take money out of your Vanguard super account. If you meet specific requirements, such as if you are purchasing your first home or are facing financial difficulties, you can also take money before retiring.

What happens to my Vanguard super when I die?

Your Vanguard super will be paid out to your beneficiaries when you die. You can choose who your beneficiaries are and how your super will be distributed.

How can I switch to Vanguard super?

You can move to Vanguard super if you are currently a member of another superannuation fund. You must fill out a transfer form and mail it to your current superannuation fund in order to accomplish this.

Is Vanguard super safe?

A reputable superannuation fund with a long history is Vanguard super. It is subject to stringent financial restrictions because it is controlled by the Australian Securities and Investments Commission (ASIC).

How much does Vanguard super cost?

Vanguard super has low fees, which can help your super grow over time. The fees for Vanguard super funds vary depending on the type of fund and the investment options you choose.

How can I compare Vanguard super to other superannuation funds?

You can compare Vanguard super to other superannuation funds using the SuperRatings website. SuperRatings is an independent website that compares superannuation funds based on a number of factors, including fees, performance, and features.

What are the pros of Vanguard super?

Low fees
Good track record
Regulated by ASIC
Wide range of investment options
Automatic investment plan
Tax benefits

What are the cons of Vanguard super?

Not as user-friendly as some other superannuation funds
Customer service can be slow
Not as many investment options as some other superannuation funds

Who can join Vanguard Super?

If you live in Australia and pay Australian taxes, you are eligible to join Vanguard Super. Additionally, you have to be at least 18 years old.

What are the investment options available in Vanguard Super?

Vanguard Super offers a range of investment options, including:
1. My Super:- A low-cost, diversified investment choice made to accommodate the requirements of the majority of investors.

2. Lifecycle:- A method of investing that automatically modifies your asset allocation as you approach retirement.

3. Diversified:- A number of investing choices that let you select the degree of risk you feel comfortable with.

Can I invest in ETFs directly through my Vanguard Super account?

No, your Vanguard Super account does not allow direct investment in ETFs. But you may invest in the same fundamentals that support our ETFs. For instance, you can invest directly in the Vanguard Australian Shares Index Fund rather than the Vanguard Australian Shares Index ETF if you’d prefer to invest in Australian Shares.

What are the minimum investment requirements for Vanguard Super?

Vanguard Super does not have a minimal investment requirement. However, each investment choice has a $500 minimum purchase requirement.

What are the tax implications of withdrawing money from Vanguard Super?

Depending on your age and situation, taking money out of Vanguard Super may have different tax consequences. You will, however, generally pay taxes on any withdrawals you make from your retirement account.

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