What to consider
What do you need to consider when choosing an investment? Understand your risk appetite, consider your investment time frame and the level of control you want over your super.
Questions to ask yourself when choosing your investment option:
- How do I feel about risk and investments?
- What’s my investment timeframe?
- 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.
The 'somewhere in between' or moderate investors tend to take a more balanced approach. They have a medium-term outlook of around five years and accept moderate risk. 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?
Two factors will greatly influence your investment time frame:
- How long before you plan to withdraw your super?
- How long does your money need to last?
Short-term investors may be approaching retirement and therefore 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.
Do I understand the Investment Options?
It is important that you look at the investment options available carefully. Each option has a different objective, 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. Take a look and check if your current choice still matches your needs.
Our full range of investment options can be viewed here:
If you are finding it difficult to choose an investment option, consider using the retirement income forecaster calculator to work out your investment mix and how your investment mix could impact on your retirement income.