Over the course of your working life, your employer regularly puts a percentage of your income into your super account. These contributions are designed to slowly accumulate into a tidy nest egg for your retirement.  

At the same time, these savings are being invested on your behalf, with the aim of growing them through investment returns.  

As your super fund, it’s Hostplus’ responsibility to safeguard and optimise your retirement savings until you’re eligible to access them (or until you change funds). We do this by investing your money responsibly, in a range of different assets, aiming to achieve long-term growth and strong returns.   

In this way, compound interest has the power to accelerate the growth of your savings over time.  

As an example, imagine you invested $10,000 in a savings account earning 5% annual interest. In a year, your savings would have grown to $10,500. In the second year, assuming you haven’t withdrawn any of that money, you’d earn 5% interest on $10,500, giving you a total balance of $11,025. Over the course of 40 years, your original $10,000 could grow to more than $70,000 – without you even needing to add any further money.¹

Compound interest on $10,000¹ 

The magic of compound interest means that even the smallest deposit can make a huge difference to your savings over time. 

Here’s an example of how compound interest can work in super. The chart below shows the potential compound interest a 20-year-old earning an average salary could earn throughout their working life. You can see here that by age 46, the interest earned becomes even greater than annual deposits.

Compound interest over a working life²

Of course, investment returns will go up and down over time, so we’ve used a 5% return here purely as an illustration. This scenario also assumes your salary doesn’t change at all between age 20 to 65, which is unlikely to be the case. So in reality, you could end up with even more in your pocket come retirement. 

Compound interest is the secret to unlocking long-term investment growth. Use it wisely, and eventually your investment returns could start outgrowing your deposits.  

Here are a few ways you can make the most of it. 

1. Keep track of your contributions throughout your working life  
   Log in to Member Online and the Hostplus app regularly to make sure your contributions are being paid correctly, and to check your investment returns. Read more
   
   
2. Find a super fund that combines low fees with strong long-term performance 
   In combination, fees and investment returns can have a big impact on your total retirement savings (this is what’s known as your net benefit). Hostplus is proud to offer our members a low admin fee³ and a history of strong long-term performance⁴ – meaning more super for you. Read more
    
3. Review your investment options regularly  
   If you want to maximise your potential investment earnings, you should make sure you’re invested in the option that best suits your investment style. Hostplus offers members a broad range of investment options to suit your needs. Read more
    
4. Make extra contributions 
   If you can afford to, making additional contributions (on top of your employer contributions) can have an outsized impact on your retirement balance – especially if you start contributing early. Read more
    
5. Give it time 
   Compound interest works best when it has time to work its magic. That’s why it’s important to focus on your long-term super returns. Hostplus has developed a long-term investment strategy that gives us the flexibility to invest in a diverse range of areas and assets with long investment time frames. Read more 

Want to learn more? Check out some of our other articles on getting the best out of your super account.