Superannuation is not an investment.

I suppose that I am guilty in these pages of taking a shortcut and describing the ways in which you can make “an investment in superannuation”. That requires an explanation which if I was a politician would be described as a backflip.

The superannuation system is an area in which investments can be made.

Because successive Governments have been seeking to encourage people to save for their own retirement they have made the tax regime for super funds very attractive. Over the past three or four years the public offer superannuation funds have dramatically expanded the offering of investment options as part of their platforms. Within the Colonial First State First Choice Platforms the offering of investment choices is identical for super and for non super. The only difference is the tax treatment of earnings within these funds.

World sharemarkets have been on a three year slide and all investors, including super fund trustees, have been affected. I do not have a single superannuation fund in my books that made money from its investments in the three years ended 30 March 2003 nor in the 2 years ended March 2009. This does not mean that superannuation is a bad investment. It simply means that the investment option chosen for all those super funds over that period of time lost book value.

If you are after favoured tax treatment then a super fund, public offer or self managed, remains by far the most attractive spot to park your long term savings. The equity funds inside superannuation perform exactly the same inside the superannuation area as those funds outside the super arena.