Building your investment portfolio versus topping up your super

  • 22.May.2019
  • Alison Banney,

A lot of people have two investment portfolios. There’s your personal portfolio, which might include cash savings, shares, bonds and perhaps a property. Then there’s your superannuation which, while sometimes overlooked, is another investment portfolio to your name. In fact, your superannuation will likely be the largest asset you own by the time you retire.

So when you have some extra money available to invest, which portfolio should you top up? Let’s take a look at a few key things to consider when deciding between investing in your personal portfolio versus topping up your superannuation.

Are you investing for income?

One thing to consider is what you’re trying to achieve with your investments. If you’re looking for a regular income stream, topping up your super might not be the best way to invest your extra cash. Unless you’re experiencing extreme financial hardship, you won’t be able to access your superannuation until you reach your preservation age which, for a lot of Australians, is 65 or older.

Instead, investing in high dividend-paying shares, fixed-income products like exchange-traded bonds (XTBs) or an investment property that returns a strong rental yield will suit investors looking for income. This isn’t to say that the investments made through your superannuation don’t return an income, but you won’t be able to access this income until you retire.

Tax advantages

If reducing your taxable income is a priority, contributing to your super could be a good option – particularly if you’re in one of the higher tax brackets. By directing some of your pre-tax salary into your superannuation through salary sacrificing, that money will be taxed at the lower super tax rate of 15%, and you’ll also be reducing your overall taxable income.

There are some limits to this strategy. If you’re earning below $37,000, it’s likely that this strategy won’t suit you since you won’t be paying much income tax anyway. Also, you’re only able to contribute $25,000 per year to your super as a pre-tax contribution, and your compulsory super payments made by your employer are included in this.

Investing in other assets like shares or property also comes with tax advantages. For example, you can invest in Australian shares with fully-franked dividends or establish an investment property which is negatively-geared.

Control and flexibility

The majority of Australians have their super invested in a pre-mixed diversified portfolio designed by their super fund. This means that, unless you’ve got a self-managed super fund or have selected the DIY option offered by an established fund, when you top up your super you won’t have much say over how that money is invested.

If you want complete control and flexibility over your investments, you might decide to invest the money in your personal investment portfolio instead. Not only can you research and select exactly which assets you want to invest in, you’ll have complete flexibility as to when you want to sell those assets, too.

If you’ve got some money to invest, topping up your super does come with many advantages. But it’s important to remember once it’s in your super, you can’t access it again until you retire.

The views of the author are not necessarily the views of XTB. The information in this article is general in nature. It should not be the sole source of information. It does not take into account the investment objectives or circumstances of any particular investor. You should read the PDS that relates to that Class of XTB prior to making an investment decision and consider, with or without advice from a professional adviser, whether an investment is appropriate to your circumstances. Australian Corporate Bond Company Limited is the Securities Manager of XTBs and will earn fees in connection with an investment in XTBs. Neither EQT or ACBC are providers of tax advice.


  • 07Dec 2021

    YTMF13: ANZ BBSW + 1.00% 07 MAR 2022

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  • 07Dec 2021


    This is the coupon date

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