Your superannuation investments play a crucial role in securing your retirement. Understanding the different investment options and their risks can help you make informed decisions that align with your financial goals and risk tolerance.
Types of Super Investment Options
Most super funds offer a range of premixed investment options with different asset allocations:
- Growth – Focused on shares and property, these aim for high long-term returns but come with higher short-term risk. Best suited for those with a longer investment horizon.
- Balanced – Typically 70% shares and property, offering moderate returns with less risk than growth options. A good middle ground for those seeking growth with lower volatility.
- Conservative – Primarily invested in fixed interest and cash, these focus on capital preservation with lower returns.
- Cash – Invested 100% in cash or equivalents, these provide stability and low risk, making them ideal for risk-averse individuals or those close to retirement.
- Ethical – These funds avoid investments in industries that don’t meet specific ethical standards and vary in market risk. Ideal for those looking to align their investments with personal values.
Choosing Your Investment Mix
Some super funds allow you to customize your investments by choosing individual asset classes, such as Australian shares, international shares, or bonds. Others provide direct investment options, enabling you to invest in:
✅ Individual shares
✅ Exchange-traded funds (ETFs)
✅ Term deposits
You don’t need a self-managed super fund (SMSF) to access direct investment options—many platform-style super funds offer this flexibility.
Lifecycle Investments
If you prefer a hands-off approach, some super funds offer lifecycle investment options, which automatically adjust your investments as you age—reducing exposure to higher-risk assets over time.
Understanding Your Risk Profile
Before choosing an investment option, consider:
- Risk Tolerance – Are you comfortable with short-term losses in exchange for potential long-term growth, or do you prefer stability?
- Investment Horizon – The closer you are to retirement, the more conservative your approach might need to be. A longer horizon allows for higher-risk, higher-reward investments.
- Market Risk Rating – Super funds provide a standard risk measure that estimates how often an investment could have a negative return over 20 years. This helps you compare different options.
Making the Right Choice
Selecting the best super investment option depends on your personal circumstances and retirement goals. Resources like ASIC’s Moneysmart website offer valuable guidance, and many super funds provide free investment advice. For tailored recommendations, consulting a financial adviser or our staff may also be beneficial.
Take control of your super today to build a secure financial future!