30/05/2019Money

Here's what you need to know about super investment options

We’ve all heard of super and why it’s important, but many of us don’t actually realise how much choice we actually have when it comes to our super...

We’ve all heard of super and why it’s important, but many of us don’t actually realise how much choice we actually have when it comes to our super. Not only can we choose where it goes (in most cases), but we can also choose how we want it invested (and that matters a lot)! Typically when you open a new super account you’ll be provided with a whole range of options in regards to your time frame, tolerance to risk and desired asset classes. 

Some super funds even provide a life-stage style option which automatically changes asset allocations as you mature. However, most companies will offer you three core investment options, which suit the vast majority of Australians. These investment options will typically be labelled Growth, Balanced and Conservative, but every fund will have a slightly different system and variety of investment options.

It’s good to have an idea of the different options available to you, as many funds and employers will automatically put you into a balanced portfolio by default, and that might not be the best option for you and your financial goals.



Growth

A growth portfolio is designed for people with a long-term investment horizon, who are prepared to weather the ups and downs of the market over time. This fund is generally focused on growth assets like Australian and international equities, property, infrastructure and sometimes even asset classes like private equity and credit. You’ll need to be prepared for a higher level of volatility as a growth investor, and you’ll need to be patient over the short-term.

FairVine’s growth portfolio is broken down as follows:

  • 40% Australian shares 
  • 35% International shares 
  • 5% Australian listed property 
  • 10% Australian fixed interest 
  • 5% International fixed interest
  • 5% Cash

 

Balanced

A balanced portfolio is one of the most popular investment options in Australia, although not necessarily by choice. When we start a new job and don’t provide our employers with the details for our super fund, they are required to open up an account on our behalf, and the default portfolio is typically a balanced one. A balanced fund is designed for investors looking for medium to long-term growth, and it generally has a higher proportion of growth assets (like Australian shares and property) than a conservative portfolio has. 

FairVine’s balanced portfolio is broken down as follows:

  • 35% Australian shares 
  • 30% International shares 
  • 5% Australian listed property 
  • 10% Australian fixed interest 
  • 10% International fixed interest 
  • 10% Cash

 

Conservative 

A conservative portfolio is typically designed for investors with a shorter time frame, who are more focused on stability, rather than growth. This option generally smoothes out volatility by investing in a higher proportion of fixed interest and cash products, and investing less in the Australian and international share markets. This is an option people may consider as they draw closer to retirement, or if they are concerned about how they’d cope with a fall in the value of their investments.

As an Australian with a super account, it’s important to know where it is, what you’re invested in, the insurance cover you have and the fees you’re paying. Your super could well and truly become your biggest asset as you approach retirement, so nurture it with care as you go through life. 

Don’t ever forget that your super is your money!

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Disclaimer

All information provided in the magazine is sourced from independent writers & may contain general advice that is not endorsed by the FairVine Super Plan.