Why every dollar matters

Not everyone can add big amounts to their super. But here’s the thing: small, steady deposits can do serious work – not just for your balance, but for your future choices. Whether you want to stop working earlier, work fewer days, or fund more purpose-led adventures, every single dollar you add today can expand what’s possible tomorrow.  

Compounding power 

Compounding is the quiet engine under the hood: your money earns returns, then those returns earn their own returns. Over time, that creates a snowball effect – tiny at first, powerful later. It’s amazing what a few dollars can do.  

For example: 

• Invest $1,000 at 5% pa and you’ll have $1,050 after a year. 

• In year two, you earn 5% on the whole $1,050. Your returns are now pulling their weight too. 

• Keep repeating and the ‘interest on interest’ stacks up, which is why even small contributions can turn into big numbers over time. 

The earlier you start, the more powerful compounding becomes. Compare two simple scenarios (excluding fees or taxes for simplicity).  

*assuming fees compounded monthly at 5%pa

That extra $10 a week has turned into an extra ~$18,000 over 20 years, and could generate even more over longer periods. You can recreate (and customise) these numbers in the Future Super app with Future Ready Check.  

Note: We’ve used a conservative 5% annual return to keep it simple. In the real world, returns vary (going both up and down), and fees and tax matter – especially inside super –  so use calculators to test your own settings. You can use Moneysmart’s Compounding Calculator to calculate the difference it could make to your balance. 

Bottom line: even modest amounts + time = serious growth. 

Beating inflation 

Prices don’t sit still. Things that cost $10 in 2000 cost close to $20 today. This inflation gradually erodes purchasing power. Have a play with RBA’s Inflation Calculator to see how the value of money changes over time; it’s a handy reality check for future-you.  

That’s why many super options set targets like ‘CPI (inflation) plus X%’– it’s about targeting growth that outpaces rising living costs so your nest egg keeps its buying power.  

Every extra dollar you contribute helps push your balance further ahead of inflation, building a bigger buffer for tomorrow’s prices. 

Tax advantages 

Dollars inside super are often more effective than dollars outside super, because of tax. In most cases, before-tax (concessional) contributions – including salary sacrifice and employer Super Guarantee (SG) – are taxed at 15% when they hit your fund, which is usually lower than your marginal income tax rate. This mean you’ll usually be paying less tax overall.  

• If you salary sacrifice or claim a tax deduction for personal contributions, more of your money stays invested and compounding for you. There are caps, though. The concessional contributions cap is $30,000 a year from 1 July 2024; employer SG counts towards this. 

• High-income earner alert: if your income plus concessional contributions add up to more than $250,000 per year, an additional 15% Division 293 tax can apply to some or all of those concessional contributions. Your super can still be tax-effective though, compared to your top marginal rate.  

A quick example: 

• $10 contributed before tax into super → typically $8.50 invested after the 15% contributions tax. 

• The same $10 paid as salary at the top marginal tax rate (45%) + 2% Medicare levy leaves you with about $5.30 to invest outside super.  

If you’re on a lower income, you might also be eligible for government co-contribution when you make after-tax contributions, or LISTO (a refund of contributions tax) – check eligibility on the ATO.  

Caps matter. Putting in extra super that takes your total contributions above the caps can trigger extra tax. The ATO has clear guidance on concessional (before-tax) and non-concessional (after-tax) caps – currently $30,000 and $120,000 per year respectively (from 1 July 2024), with bring-forward rules on the after-tax side, and the ability to access previous years unused caps on concessional contributions.  

More choice, more security 

Every extra dollar builds freedom for your future. It can give you: 

• Choice: the option to retire earlier, cut back to fewer days, or spend more time on causes you care about. 

• Security: a stronger buffer for health surprises, home repairs, or supporting family. 

• Calm: because those small, steady boosts today are compounding into more flexibility later. 

This isn’t about perfection. It’s about momentum: set a small amount, automate it, and let time do its thing. 

Every dollar makes a difference 

Your superannuation: 

• Compounds over time, 

• Helps outpace inflation, 

• Delivers tax benefits, and 

• Builds freedom and security for the future. 

And here are some ways to get it working harder.  

• Salary sacrifice through your employer. Arrange extra before-tax contributions (check caps and your cash-flow). ATO guidance on caps and deductibility is here. [any FS content on this?] 

• After-tax contributions from your bank account. Top up directly (these count toward the non-concessional cap). Check out How Future Super Works and the ATO’s rules before you act.  

Need help? Use Future Ready Check inside the Future Super app or speak to a Future Super Coach for general advice that fits your goals. 

FAQs: Compound interest

What’s a realistic return to use in compounding calculators? 

There’s no single ‘right’ number. Many people test a range (like 4%–7% p.a.) to see good/medium/worst-case scenarios. Jump into our calculator [add link to public calculator] and play with the assumptions to match your timeline and risk comfort. 

How often are Future Super returns ‘compounded’? 

Future Super prices are calculated daily on business days. Investment returns (income, gains, losses) are reflected in the daily unit price. This means your investment value changes daily. Because returns flow through the unit price continuously, the compounding effect occurs naturally over time — not just monthly or quarterly. If distributions are reinvested, that further adds to compounding this reinvestment start earning returns. That is what creates the compounding effect. 

Why compare super to inflation at all? 

Because future prices matter. If your money grows slower than inflation, your spending power goes backwards. Check out the RBA’s CPI and inflation calculator to see how prices have moved over time.  

Are concessional contributions really taxed at 15%? 

Generally, yes – employer SG, salary sacrifice, and deductible personal contributions are taxed at 15% inside super (up to the cap). High-income earners may pay an extra 15% (Division 293) on some of those concessional contributions.  

What are the current contribution caps? 

From 1 July 2024: $30,000 concessional (before-tax) and $120,000 non-concessional (after tax), with bring-forward rules and access to unused previous years concessional caps if your total super balance is less than $500k potentially allowing more after-tax in a single year if eligible.  

Why does $10 in super ‘go further’ than $10 in my pay? 

Because super contributions are usually taxed at 15% on the way in, while salary is taxed at your marginal rate (plus the 2% Medicare levy usually applies). For someone on the top bracket (45% + Medicare levy), $10 in super can leave $8.50 invested, compared to about $5.30 after tax in your pocket.   

All information is general in nature and does not take account of your personal objectives, financial situation or needs. Consider speaking with a Future Super Coach or a financial adviser. Numbers in all examples are illustrative. Information is current as of November 2025.