Unit Pricing

Think of your super fund like a delicious pie. The pie itself represents the total value of all the investments the fund holds (shares, bonds, property etc.). This pie is then sliced into tiny pieces called “units.” Each unit represents a small ownership stake in the entire pie.

Unit Price: The Value of Each Slice:

The unit price is simply the price of one unit. It reflects the current value of all the investments in the pie, divided by the total number of units available. Just like the price of a slice of pie can fluctuate depending on the ingredients and market demand, the unit price of your super can go up or down over time.

How Unit Pricing Affects You:

Here’s where it gets personal:

• Contributions Buy Units: When you or your employer contribute to your super, you’re essentially buying units at the current unit price. The more you contribute, the more units you accumulate.
• Unit Price x Units = Account Balance: To calculate your total super balance, simply multiply the number of units you hold in each investment option by the corresponding unit price. This reflects the changing value of your investments within the pie.
• Market Performance Impacts Unit Price: If the investments in the pie (the fund’s assets) perform well, the unit price will generally increase. Conversely, if the market takes a dip, the unit price may decrease.

Benefits of Unit Pricing:

• Transparency: Unit pricing offers a clear way to track your super’s performance. By monitoring unit price fluctuations, you can gain a sense of how your investments are faring.
• Flexibility: Unit pricing allows for easy contributions and withdrawals. When you contribute, you buy units at the current price. When you withdraw some funds, units are sold back to the fund at the prevailing unit price.
• Choice: Many super funds offer multiple investment options with varying risk profiles. Each option will have its own unit price reflecting the underlying investments.

Things to Keep in Mind:

• Don’t Panic Over Short-Term Fluctuations: Unit prices can fluctuate daily based on market movements. While long-term growth is important, don’t get caught up in short-term dips.
• Focus on Your Investment Strategy: Choose an investment option that aligns with your risk tolerance and long-term goals. Don’t get swayed by short-term unit price movements.
• Stay Informed: Most super funds provide easy access to unit pricing information on their websites or mobile apps. Stay informed about your investment options and unit price movements.

In Conclusion:

Unit pricing is a fundamental concept in understanding how your super grows. By viewing your super as a collection of units, you can gain a clearer picture of your investment performance and track your progress towards a comfortable retirement.