To help keep your super on track to meet your goals for retirement, it's important to understand the investment choices available for your account and choose those that best suit your needs.

What sort of investor are you?

Before thinking about which investment option(s) to choose, it can be helpful to build your own ‘investor profile’ that takes your preferences and circumstances into account.

It's useful to consider a few key questions when thinking about whether a particular investment option is right for you:

  • How long is your super likely to be invested before you retire?
  • How long might you need to keep it invested in order to provide an income after retirement?
  • What level of returns are you hoping to achieve, for example stable and secure, or maximum potential growth?
  • How much risk are you comfortable with?

Generally you’ll need to consider these factors, and others depending on your circumstances, to help determine which options might suit your needs. It can be risky to make decisions based on one factor alone, as levels of risk, returns and timeframes are often related.

Finding the options that suit you

While investment options can often look similar, each one generally has a different investment objective, which is simply the level of investment returns it’s aiming to achieve.

Having different investment objectives also means each option likely invests in a mix of assets and therefore has a different level of investment risk.

When choosing an option or combination of options, it’s important to understand how the level of investment risk and potential return for each option might affect your investment in the short term and long term.

For example:

  • The value of investment options with higher risk, such as our Moderate, Balanced, Growth, Australian Shares or International Shares options, might rise and fall a little or a lot in the short term but they also generally have the potential for higher average investment returns in the long term.
  • The value of investment options with lower risk, such as our Cash or Conservative options, can be more likely to have more consistent or stable returns in the short term but lower potential average returns in the long term.

Understanding how this risk/return relationship works with your investment timeframe is helpful in choosing investment options.

For example, a 35 year old who’s likely to have their super invested for another 30 or 40 years may prefer a higher growth investment option because they have sufficient time to ride out any short-term fluctuations in investment market performance. But someone who’s 1 or 2 years away from retirement may not be as comfortable with this level of risk and therefore may want to consider investing part of their super in a lower risk investment option.

It’s also important to consider how long your super will be invested overall. For example, a person may invest conservatively over the long term, feeling like it’s better to be safe than sorry. However, more conservative options may not generate as much growth in savings over the long term, which may result in super savings running out sooner than expected during retirement.

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