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You work hard for your money, including your superannuation. So - it’s important to understand how that money is invested, whether there is a default investment option and what other choices you have.

According to the Government’s MoneySmart website, before jumping in and deciding to choose or change your superannuation investments, it’s a good idea to take some time and check you understand the available options. Remember, the choices you make can make a big difference to how your super grows.

What options are available to you?

Superannuation funds all differ in the options they have available for their members. Generally speaking however, there will be several options available, including a premixed selection of investments. They generally include: 

1. Growth funds

Investment mix

With a growth fund, a high proportion of your money is typically invested in shares or property, with a smaller portion in fixed interest or cash.

Potential returns

A growth fund aims for higher returns over the long term, but this means you could have a negative return more frequently than with lower-risk options. 

2. Balanced funds

Investment mix

Your money is typically invested across growth assets such as shares or property and defensive assets such as, fixed interest or cash.

Potential returns

A balanced fund aims for reasonable returns, but they may likely be lower than those of growth funds. However, the risk of losses is lower when compared with growth funds.

3. Conservative funds

Investment mix

The majority of your money is invested in defensive assets such as fixed interest and cash, with some money invested in growth assets such as shares and property.

Potential returns

Generally, this option gives a lower return over the long term, but the trade-off is a reduced risk of loss. Conservative funds give less chance of a negative return when compared with a balanced fund.

4. Cash funds

Investment mix

Your money is invested in cash. 

Potential returns

A cash fund aims to give you capital security – so the returns are likely to be low, but the likelihood of your losing money on your investment is reduced.

You also have the choice of creating your own investment mix using different asset types. For example, you may want to invest in a mix of shares through multiple investment options and allocate a percentage of your super money to invest in them.

Alternatively, you may want to consider direct investments – if your fund offers them.

How to choose an investment option that’s right for you

There are some things you should consider before choosing your investment option(s). Most importantly, if at any point you’re unsure about the options available to you, reach out to your financial adviser or super fund. While your fund can’t offer advice, they can provide you with factual information which might help. 

Before choosing your investment, consider how long you have until retirement and your comfort level with investment risk.

If you’re not comfortable with riskier investments – which carry a higher likelihood of losing money – you may need to consider a conservative option. Just bear in mind that such an option will generally offer lower returns in the long term.

Some people choose to be more conservative with their investments as they approach retirement, as this reduces the risk of their balance going backwards. While others choose to seek higher returns, knowing this carries the risk of potentially losing some of their money. The choice is yours and should be based on your personal risk tolerance. 

Important information

This information was prepared by Resolution Life Australasia Limited ABN 84 079 300 379, AFSL No. 233671 (Resolution Life). A copy of the Product Disclosure Statement can be obtained by contacting Resolution Life. This general advice has been prepared without taking into account your particular financial needs, circumstances or objectives. You should consider the appropriateness of this information in light of your circumstances. This advice is based on our understanding of current law as at March 2022, and is based on its continuance unless stated otherwise. While every effort has been made to ensure the accuracy of the information, it is not guaranteed. Resolution Life do not actively monitor breach of superannuation contribution caps. You should keep track of the contributions made to your account in respect of the caps applicable to you. You should obtain professional advice before acting on the information contained in this communication. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Resolution Life is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

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