From his pocket money and money earned busking before Christmas, DS1 had saved up over $350 in his "Happy Dragon" bank account. Today I transferred in some additional money from his high interest online savings account (which holds the money he earned while doing a paper round) so that there was enough to make an online contribution of $600 into the retirement savings account (RSA) he has with AMP.
I'll transfer another $400 before the end of June so that he'll have made a total "after-tax" contribution of $1000 into his superannuation account this financial year. I'm not sure if he'll get the $1500 government co-contribution this tax year, but it's worth making the contribution just in case. Before last year's changes to the tax laws, only employees were entitled to the co-contribution, so he was only eligible while he was earning money from his paper round. However, under the new rules self-employed people are also eligible for the co-contribution, so he should be able to contribute some of the money he earns from busking and get the 150% co-contribution (up to $1500) from the government.
The RSA account only offers a fixed interest option, but the rates are quite good (similar to an online savings account) and there are very low fees. The main benefit of this account is that DS1 was able to open it on his own behalf, which enables him to make contributions that are eligible for the co-contribution. His other retirement account is a so-called "child super" account which I had to open on his behalf, and which is intended for contributions made for him by parents and grandparents. There is an annual limit on how much can be contributed into a child super account, but it has a full range of investment options available, so it's a good choice for his long term retirement savings. Once he reaches 18 it will convert to a standard superannuation account.
Copyright Enough Wealth 2007