What type of investor are you?
How you choose to invest your money will depend largely on the type of investor you are. When it comes to super, there are three key considerations in choosing the right investment for you:
- How long you’re investing for
- How hands-on you want to be when managing your super
- How much investment risk you're comfortable with
1. How long do you want to invest for?
Your investment timeframe is how long you want to invest and keep your savings growing in super. The younger you are, the longer your investment timeframe will be.
Of course, you can invest for however long you want. Even if you don’t know when you'll retire, thinking about your investment timeframe can help you choose an option that matches your goals.
2. How hands-on do you want to be?
Choosing the right investment can impact how much your savings grow and how long they last. Before making your choice, you need to know how much direct control you want over your investments – or how 'hands-on' you want to be.
You can choose from three different investment options, each with a different hands-on level:
3. How much risk are you comfortable with?
Different investment timeframes and options come with different risk levels. An investment’s risk level largely depends on how long you invest in it.
- Within a short timeframe (five years or less), the main risk to your investment is short-term fluctuations that could reduce your savings.
- Investing over a longer period (20 years or more) means that your investments will probably have time to ride out short-term ups and downs. Your main risk over the longer term is keeping up with wage inflation.
Different types of assets also have different levels of risk. Consider how you might offset this risk by selecting diverse investments.