With super, you can set and ignore. But choosing a suitable investment option will have a major impact about how your super performs. So see what your fund yet others have to offer. Super funds invest your money to grow your nest egg over your working life. Most very funds enable you to choose from a range of investment options, depending on how much investment risk you are willing to take.
For example, a traditional option will offer you lower risk but lower comes back over the long term. A higher growth option shall have higher risk and experience more volatile returns on the short term, but will usually achieve higher returns over the long term. If you’re at least a decade from retirement, you may consider choosing an increased growth option as you have time to ride out the fluctuations in the market. As you can pension closer, you might opt to reduce your degree of risk, as preserving your capital can be more important.
You can find out about your fund’s investment options by visiting its website or giving them a call. You’ll also find detailed information in the fund’s product disclosure declaration (PDS). Most funds have a ‘default’ investment option. Normally, this is a well balanced investment option which has a mix of defensive and growth assets. A fund’s default investment option is also its MySuper option.
See MySuper for more details. Your fund’s various investment options may contain the same types of possessions, but at different weightings, to match the known degree of risk you are more comfortable with. Invests around 85% in shares or property. Aims for higher average earnings over the future. This also means higher loss in bad years than those you would experience with lower risk options.
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You may also be able to choose ‘high growth’ option with 100% in shares and property. Invests around 70% in stocks or property, and the rest in set cash and interest. Aims for reasonable returns, but less than growth funds to reduce threat of losses in bad years.
Those loss usually take place less frequently than in the growth option. You may even have the ability to choose ‘moderate’ option with around 50% in stocks and property. Invests around 30% in stocks and property with almost all in fixed interest and cash. Aims to reduce the risk of loss and therefore accepts a lower return over the long term. Year than in the balanced or development options There is less chance of having a negative. Invests 100% in deposits with Australian deposit-taking institutions or in a ‘capital guaranteed’ life insurance coverage. This option aspires to ensure your capital and accumulated earnings cannot be reduced by losses on investments.
This option is designed to screen out companies that don’t meet environmental, cultural and governance criteria dependant on an investment supervisor. A pre-mixed investment option that comes after an honest strategy could sit anywhere along the chance spectrum – from high growth to conservative. Some very funds let you customise your accounts by changing weightings to the various asset types or choose direct investments, within limits.
For example, you might favour the view for international stocks over Australian ones, and ask your fund to rebalance your portfolio or change the true way future efforts are spent. Your fund may also allow you to choose direct investments, so you can run your account like a self-managed super fund – but without all the paperwork. A lot of people work for 30 to 40 years and live for another 25 to 30 years after retiring. You want your super to develop and keep speed with inflation in this right time. For this reason, a growth or balanced strategy may suit a long-term investor who will not be spending their super for more than a decade.
A higher risk strategy may deliver higher results, but the risk is that you will see loss in bad years. Over 30 to 40 years, it’s likely that any development strategy will lose profit at least four to six 6 of these years. However, there will tend to be more than downs ups. Historically, over any 20-year period, a rise or balanced strategy has given better returns than more conservative investment options.
