When it comes to superannuation, most funds offer a range of investment options.
If there’s one thing certain in life it’s change. And generally your attitude towards saving and investing will change as you get older.
How your super is invested when starting your first job may not be the right approach when you’re approaching retirement. Luckily you can change your investment options at any time and this could make a real difference to how much money you have when you retire.
There are usually several different investment options to choose from. If you haven’t selected an investment option, you’re probably invested in your fund's default option, which will generally take a balanced approach to risk and return.
To get up to speed on your super investment options, we’ve answered three common questions: how your money is invested, the different options available, and how your stage of life may influence your preferences.
What do super funds do with my money?
Typically, no less than 9.5% of your before-tax salary (if you’re eligible) is paid into super, which is then taxed at a maximum of 15%. Your super fund will invest this money over the course of your working life, so you can hopefully retire comfortably.
Your super fund will let you choose from a range of investment options and generally the main difference will be the level of risk you’re willing to take to potentially generate higher returns.
If you’re not sure what you’re invested in, contact your super fund. You may also be able to see your current investment option by logging into your super fund’s online portal – this may also give you a current balance and other information such as your projected super savings over a lifetime.
If you’re an AMP customer you can access your banking, super, insurance and investments all in one place through My AMP.
What are the super investment options I can choose from?
Most super funds let you choose from a range, or mix of investment options and asset classes. These might include 'growth', 'balanced', 'conservative' and 'cash' but the terms can differ across super funds. Here’s a small sample of the typical type of investment options1 available:
- Growth options aim for higher returns over the long term, however losses can also be notable when markets aren’t performing. They typically invest around 85% in shares or property.
- Balanced options don’t tend to perform as well as growth options over the long term, but the loss is also less when there are market downturns.They typically invest around 70% in shares or property, with the rest in fixed interest and cash.
- Conservative options generally aim to reduce the risk of market volatility and therefore may generate lower returns. They typically invest around 30% in shares and property, with the rest in fixed interest and cash.
- Cash options aim to generate stable returns to safeguard the money you’ve accumulated. They typically invest 100% in deposits with Australian deposit-taking institutions, such as banks, building societies and credit unions.
Super funds may have different allocations, so it’s important to read your super fund’s product disclosure statement before making any decisions. It could be a good idea to consider factors such as your current stage in life, and future plans and goals before choosing the super investment option that’s right for you.
What's the right investment option for me?
Choosing the most suitable investment option generally comes down to your goals for retirement, your attitude to risk and the time you have available to invest.
If you’re young, you may have more time to ride out market highs and lows, and therefore be willing to take on more risk in the hope of achieving higher returns.
If you’re closer to being able to access your super, you may prefer a conservative approach as a share market crash could be harder to recover from than if you’re 20 years away from retirement.
While many people put off thinking about super, being informed and engaged from a young age and throughout your career may make a big difference to the returns generated and your final super balance.
Adam Spencer explains more about this in the video below.
We all want to live our ideal retirement. But that takes careful planning… and superannuation. Unlike the one size fits all balanced investment option offered under some super products, a lifecycle investment strategy changes depending on where a person is in their life. Which means how their super money is invested changes over time.
When we’re younger, there are a lot more growth investments in our super, such as shares and property, which tend to be riskier. That’s because there’s plenty more time, and career, to go, so we can be bolder and aim for a bigger return.
But, as we age and move towards retirement, this super is moved to more conservative investments, or safer, lower risk ones. Because less time till retirement means less time to ride the ups and downs of the financial markets.
Where a balanced investment option would maintain the same ratios of how money is invested, a lifecycle investment approach is tailored to change and adjusts over time to help achieve a comfortable retirement. Now, I could go on to compare the lifecycle to the balanced approach, but that would be like comparing apples to oranges. As always, if you want to make sure you’re on track for the retirement you want, the best thing you can do is to engage with your super. Which is what I’m going to do… right now.
- Check out our Investor Style Tool to determine the investment style you’re most comfortable with.
- Take control of your super in eight easy steps, starting by checking your balance with your super fund.
If you need further assistance, speak to your financial adviser and if you don’t have one but would like some advice, you can call us on 131 267 or use our find an adviser tool.
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Products in the Super Directions Fund and the Wealth Personal Superannuation and Pension Fund are issued by N.M. Superannuation Proprietary Limited (N.M. Super) ABN 31 008 428 322 (trustee), which is part of the AMP group (AMP). Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP at amp.com.au or by calling 131 267. Read AMP’s Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.
Products in the AMP Eligible Rollover Fund, National Mutual Retirement Fund, and NM Pro Super Fund are issued by Equity Trustees Superannuation Limited ABN 50 055 641 757 (trustee). Risk products are issued by AMP Life Limited ABN 84 079 300 379 (AMP Life), which is part of the Resolution Life group. AMP Life has proudly served customers in Australia since 1849. AMP Limited ABN 49 079 354 519 has sold AMP Life to the Resolution Life group whilst retaining a minority economic interest. AMP Limited has no day-to-day involvement in the management of AMP Life whose products and services are not affiliated with or guaranteed by AMP Limited. AMP Limited is not liable for products issued by AMP Life or any statements or representations made in the PDS for those products. “AMP”, “AMP Life” and any other AMP trademarks are used by AMP Life under licence from AMP Limited. Before deciding what’s right for you, it’s important to consider your particular circumstances and read the relevant Product Disclosure Statement or Terms and Conditions available from AMP Life at amp.com.au or by calling 133 731. Read AMP Life’s Financial Services Guide for information about our services, including the fees and other benefits that AMP Life and/or other companies within the Resolution Life group may receive in relation to products and services provided to you.
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