With over 17 million Australians with a superannuation account, it’s likely that you have at least one super account (if not multiple accounts - eeeep!).

But the problem is that because you can only access your super in years to come, we often forget to care about it today.

But here’s the thing: a difference of 1% in investment returns over 30 years can end up costing you more than $100,000.

So, put simply, if you’ve got super, you need to be thinking about returns.

Looking at your investment return is one thing, buuuut there’s also management fees to think about, and admin fees, and insurance, and taxes, aaah!

The good news is, those numbers look more menacing than they actually are. 

And by the end of this article, you’ll know how to break them down step by step to understand exactly how much value you’re getting from your superfund.

Now, most of us, when we’re sussing how our super’s performance will look at a figure called the return.

Return reflects how much that investment has grown and is usually represented as a percentage.

If you invest $1,000 in the stock market, and one year later that investment has grown to $1,100, you’ve made a return of 10%.

But the return is a sneaky figure…it doesn’t always divulge the whole story.

That’s because there are actually two types of returns: gross return and net return.

Gross return

Gross return shows an investment’s return before any expenses or taxes are deducted.

When you invest in super, you’re paying fees such as administration fees, investment management fees, and super insurance. 

These fees aren’t incorporated in your gross return.

Neither is the tax you pay on your earnings.

Net return

This is where net return comes in, which is a more accurate measure of your actual return

It reflects how much you’ve made after things like fees, taxes, inflation, and other expenses are deducted; it’s  the amount you ultimately go home with.

Simply put: Net return = Gross return - fees - taxes

Because net return takes into account personal circumstances eg. your marginal tax rate, your individual fees, it can be hard to calculate.

Returns can be described differently by different superfunds, which is why it’s important to understand your net return when you’re comparing across different funds.

‍Gross vs net return in action 

Here’s an example of the difference between gross and net return for a super investment. For simplicity, in this example we’ll just look at fees, not any taxes.

Phoebe has a superannuation account with Superfund A with an annual gross return of 8%. In one year, Phoebe’s super grows from $25,000 to $27,000. 

Phoebe’s super fund charges an administration fee of $100 per year, and a management fee of 1.5% of her total balance. She also pays an annual insurance premium of $200.

Fees:

• Administration fee: $100
• Management fees: 1.5% of $25,000 = $375
• Insurance premium: $200

Phoebe’s fees total to $100 + $375 + $200 = $675

Phoebe’s net return is $2,000 - $675 =  $1,325 (as a percentage, that is 5.3%)

So while that 8% looks rosy, it’s only when Phoebe breaks down her net return that she’s able to see her actual return for her super.

And because gross return and fees vary across superfunds, a gross return figure is hard to compare.

For example, another superfund, Super fund B might offer Phoebe a gross return of 7.5%. On face value, that looks like a lower return.

But Superfund B’s total fees equate to $500, which is lower than Superfund A.

That means, with Superfund B, Phoebe’s net return would be $2,000 - $500 = $1,500 (or 6% as a percentage).

Looking at net return makes it far easier to compare across superfunds so that Phoebe can make the best decision for her financial future.

And while this article has focused on net returns in super, this concept of calculating net return applies to all forms of investments, whether it be shares, property, or even your savings account.