Choosing the right super option

Picking the right investment option is important. Here’s some things to consider first, and a few tips.

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:

  1. How long you’re investing for
  2. How hands-on you want to be when managing your super
  3. 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 inflation. 

Different types of assets also have different levels of risk. Consider how you might offset this risk by selecting diverse investments.

Your investment options

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Managing risk over the short and long term

Your investment time-frame is a factor when considering volatility risk. While Cash has been steady over the last 20 years, it's also grown less than assets like shares. If your savings are growing too slowly, they might not keep up with the rising costs of living. 

Australian shares grew strongly over the same period of time, but if you look at just one year (such as 2009) you can see that shares can be risky as well as rewarding.

cash-vs-australian-shares-performance-graph
The information in this graph has been prepared using data from the following market indices: Australian shares – S&P/ASX 300 (All Ordinaries before 1/4/2000); Cash – Bloomberg AusBond Bank Bill Index. The amounts shown are calculated to 30 June 2016.

Our top five tips for managing risk

  1. Focus on your long-term needs

    It can be tempting to change options when markets are down, but you may be better off staying put. Investments that fluctuate over short periods usually grow more over the long-term.

  2. Protect yourself with diversification

    By spreading your investments across a variety of companies and industries in different asset classes, you’ll minimise market fluctuations that effect your savings.

  3. Stick to your strategy

    Market movements can make the asset allocation of your portfolio move away from its original strategy and change your risk level. In our PreMixed options, actively adjust this for you. If you invest in our DIY Mix options or Member Direct, you’ll have to manage this yourself.

  4. Review your strategy

    When your circumstances or objectives change, you should consider reviewing your investment options. As you get closer to retiring, you might need to access some of your super sooner.

  5. Seek financial advice

    The best option is the one that suits your investment timeframe, circumstances and goals. A professional financial adviser can help you develop a strategy to meet your needs, which could make a big difference to your retirement savings over the long term.

Investment guide - pdf, 4.6MB

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