Question
3. Assume that today is your 25th birthday and have an annual salary of $60,000 (+ super). Your salary is expected to grow by 3%
3. Assume that today is your 25th birthday and have an annual salary of $60,000 (+ super).
Your salary is expected to grow by 3% per year before reaching retirement age (your 65th birthday). You are currently doing some research on superannuation choices.
a. Calculate your annual salary for each year between your 25th and 65th birthday.
b. Calculate your annual superannuation contribution. For simplicity, assume that
your contributions happen annually, at the end of each year.
c. Assuming future returns the you have calculated in 2.e. remain the same until your 65th birthday, what would be the balance in your superannuation account
each year?
d. Repeat 2.d., using your balance under the return assumptions of the 9 investment options.
e. Discuss the differences the choice of an investment in a superannuation account makes. Is this an important choice?
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