Questions to ask yourself when choosing your investment option:
• How do I feel about risk and investments?
• What’s my investment time frame?
• Do I understand the Investment Options?
• What degree of control do I want to manage my super?
How do I feel about risk and investments?
How comfortable you feel about risk is known as your risk profile. Generally, the higher the level of risk you are prepared to accept, the higher the potential gain or loss.
Shares are one of the riskier asset classes. Their value can rise and fall significantly over the short term. But they have delivered the best average returns over the long term. Conversely, cash is one of the least risky asset classes. You have little chance of losing your capital, but the returns are likely to be the lowest on average over the long term.
Are you cautious, aggressive, or somewhere in between? Generally speaking, cautious investors don’t like negative returns. They usually focus on short-term performance and pursue lower-return options with lots of defensive assets, like cash-related investments.
Moderate investors tend to take a more balanced approach. They have a medium-term outlook of around five years and accept moderate risk. But they don’t usually have the time or inclination to weather market cycles. Moderate investors generally choose a balanced mix of assets.
Aggressive investors seek higher returns. They seek above-average performance and will usually be comfortable with above-average risk. Aggressive investors tend to take a long-term view and mainly invest in growth assets such as shares.
What's my investment time frame?
How you invest over a longer time frame is usually very different to how you would invest over a shorter time frame.
Short-term investors usually favour lower-risk investments because they prefer less volatile and more predictable returns. Long-term investors are often better placed to seek higher returns because they usually have sufficient time to ride out volatile market cycles and returns.
Two factors will greatly influence your investment timeframe:
• How long before you plan to withdraw your super?
• How long does your money need to last?
Do I understand the Investment Options?
It is important that you look at the investment options available carefully. Each option have different objectives, investment strategy, risks and potential return outcomes. If you haven’t made an investment choice you’ll be invested in the MySuper Balanced option. This option is designed to suit most members; however, it may not meet your needs. Our full range of investment options can be viewed here. Take a look and check if your current choice still matches your needs.
What degree of control do I want to manage my super?
legalsuper members can choose the level of control over their super. Members can chose from four broad choices of control. These choices of control include:
• No control - If you haven’t made an investment choice you’ll be invested in the MySuper balanced option.
• Pre-Mixed Options – Member can choose from a range of diversified investment options that combine different types of investments
• Sector-Specific Options – Members can chose from a number of different asset classes to build their own mix of asset classes.
• Direct investment option (DIO) – legalsuper also provides members with the ability to invest their super in their choice of shares/securities, exchange traded funds, listed investment companies and term deposists.
It is import that members choose the right level of control that best suits their requirements.