Super investment basics

Not all super funds are equal. How funds invest your money can vary significantly. It is important for all Australians to understand the basics and make informed decisions.

Different people have different approaches to money. That's why super funds offer a range of investment strategies for you to choose from. 

Each strategy allocates different amounts of your super money to growth and defensive assets. 

How is your super performing? Check for free at Rollit Wealth.

Growth assets
Growth assets include investments in Australian shares, international shares, property, private equity and infrastructure. 

They have a higher level of risk than defensive assets. This means you may experience low or negative returns in the short term. Over time, however, they are likely to deliver higher returns than defensive assets.

As growth assets are strongly influenced by share market fluctuations, they can vary considerably over shorter time frames - for example during the COVID-19 crisis.

Defensive assets
Defensive assets include investments such as cash (bank deposits) and fixed interest (bonds and debentures). They tend to carry lower risk levels in the short term and are more likely to generate lower levels of return over the long term. 

Capital stable sector investments
Super funds invest around 0% - 50% of your super in shares and property (growth assets) with most of your super invested in fixed interest and cash (defensive assets). 

This investment strategy aims to reduce the risk of losing money and therefore you are likely to get lower investment returns over the long term. Capital Stable investments have less chance of having a bad year than a balanced or growth option.

Balanced sector investments
Super funds invests around 50% - 75% of your super in shares and property (growth assets), and the rest in fixed interest and cash (defensive assets). 

This investment strategy aims for reasonable returns, but less than growth investment strategies to reduce the risk of losses in bad years. Balanced investment losses are usually less than growth options. 

Growth sector investments
Invests around 75% - 100% of your super in shares and property (growth assets), and the rest in fixed interest and cash (defensive assets). 

This investment strategy aims for higher investment returns over the long term. This also means you may have higher losses in bad years than those you would experience with lower risk options such as capital stable or balanced investments. 

Ethical investments
This investment option aims to screen out investments in companies that don't meet environmental, social and governance standards determined by the super fund investment manager. 

An ethical investment strategy could sit anywhere along the risk spectrum - from capital stable to growth.

Indexed investments
Rather than having an active investment manager try and outperform a market, index funds replicate the market average. This means they invest in all or most of the shares, property, fixed interest or cash in an index. 

Indexing is based on the theory that investment managers as a group cannot beat the market. An index strategy could sit anywhere along the risk spectrum - from capital stable to growth.

MySuper default investments
MySuper accounts are the default investment option provided by employers to employees who do not select their own choice of super fund. They can be either a single investment option, typically a growth or balanced investment strategy, or alternatively a life-stage investment. MySuper products have automatic life insurance cover and premiums will be automatically be deducted from your super account.

General advice warning

Rollit Wealth provides general information only. You should assess whether the information is appropriate for you having regard to your objectives, financial situation and needs and consider obtaining independent professional advice before making an investment decision. If information relates to a specific financial product you should obtain a copy of the PDS for that product and consider that statement before making a decision whether to acquire the product. Roll-it Super Pty Ltd. ACN 611 756 140. AFSL Authorised Representative No. 1273703 of MSC Advisory Pty Ltd. ACN 607 459 441. AFSL 480649 (MSCA).

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