When it comes to planning for the future, your superannuation is one of the most critical tools to achieve financial security. But did you know that you can play an active role in how your super grows? Choosing the right investment option within your super can make a significant difference in your retirement savings. Here’s a breakdown of the investment options available in Australian superannuation funds and how you can align them with your financial goals.

What Are Super Investment Options?

Superannuation funds in Australia generally offer a range of investment options to suit individual preferences and risk tolerance. These options determine how your superannuation contributions are invested and, subsequently, how much they could grow over time. From conservative to growth portfolios, the choice you make will directly influence both your potential returns and the level of risk involved.

Types of Super Investment Options

1. Conservative Options

• Conservative investment options focus on protecting your capital. These portfolios typically allocate a high percentage (around 70-90%) of their assets to low-risk investments such as cash and fixed-interest securities.
• This option is ideal for individuals nearing retirement who prioritise stability over high returns. It offers less growth potential but minimises the risk of losing money in volatile markets.
• Lower risk, lower returns. This option may not yield large gains but provides consistent, predictable performance.

2. Balanced Options

• Balanced portfolios aim to strike the middle ground between stability and growth. They often have a roughly equal allocation towards growth assets (like shares and property) and defensive assets (like bonds and cash).
• This is great for professionals or investors with a medium-term investment horizon who want a balance between risk and reward.
• Moderate returns with medium risk. While your investments may experience some fluctuations, they’re generally less volatile than higher-growth options.

3. Growth Options

• Growth-focused options allocate a significant proportion (up to 85-100%) of your super to growth assets like equities (shares), property, and international investments.
• Designed for those early in their careers or with a long retirement horizon who are willing to take on more risk for higher potential returns.
• Higher risk, higher returns. While this option has the potential for substantial gains, it may also suffer from significant market fluctuations.

4. High-Growth or Aggressive Options

• The high-growth option is the riskiest of all, often allocating nearly all funds towards equities and growth-focused investments.
• This option suits investors with a long-term focus who have high-risk tolerance and understand market volatility.
• Highly unpredictable but offers substantial opportunities for wealth accumulation over the long term.

5. Ethical or Sustainable Investment Options

• More Australians are choosing ethical or sustainable investment options, which focus on socially responsible and environmentally friendly investments.
• Individuals concerned about how their money impacts the world tend to choose ethical funds, which offer competitive returns while aligning with their values.
• Similar return and risk metrics as the corresponding growth or balanced options but with a focus on socially responsible investing.

Customising Your Super Investments

Did you know that most superannuation funds allow you to adjust your investment options? Many funds offer flexible online portals where you can choose or switch your investment strategy with just a few clicks. Always take the time to review your fund’s Product Disclosure Statement (PDS) to understand the specifics of the available options and their associated risks.

Switching your super investment option can be as simple as selecting a new strategy online, typically via the member portal of your superannuation fund. The process is quick, but it’s essential to have a clear understanding of your financial goals and risk tolerance before making any changes.

Why Your Investment Choice Matters

The investment option you choose significantly impacts your returns risk profile, which is how much return you can expect relative to the level of risk you’re willing to take.

For instance:

• A conservative option may stabilise your savings if markets face a downturn, but it might not keep up with inflation.

• A growth or high-growth option could deliver strong returns over decades but may experience considerable volatility in the short term.

It’s all about finding the right balance that aligns with your personal circumstances, goals, and timeframe.

Tips for Choosing the Right Investment Option

1. Assess Your Financial Goals

Ask yourself—are you focused on conserving your balance or growing it significantly?

1. Understand Your Risk Tolerance

If you get nervous during market dips, a conservative or balanced option might be ideal for you.

1. Think Long-term

Retirement savings benefit from compounded growth. If you have time on your side, you might consider a higher-growth option.

1. Review Your Investment Regularly

Life stages change, and so do financial goals. Regularly review your investment option to ensure it still aligns with your needs.

The Bottom Line

Your super is one of the most important financial assets you’ll have—make it work for you. Take the time to explore the investment options offered by your super fund, assess your goals, and adjust accordingly. Whether you’re a risk-taker or prefer steady growth, aligning your super strategy with your life stage and financial aspirations can make a significant difference.

Remember to check your fund’s PDS (Product Disclosure Statement) for detailed information about available investment options and consult a professional advisor if you’re unsure about your decisions.

If you would like to improve your current investment strategies or are looking to start your investment journey, click here to organise a complimentary 20-minute phone call with an EPG Wealth adviser.

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