Article

How much risk should I take in my super?

Super and investments 101 | Date Posted: 28 November 2019

 

“Risk comes from not knowing what you are doing.” - Warren Buffet

When it comes to super, most investors invest their money in a diversified investment option.

Mine Super members have a choice of four pre-mixed investment options, to help meet their financial goals. These hold different amounts of growth and defensive assets in order to match different investor risk profiles and to help them reach their different financial goals.

Aggressive

The Aggressive option accepts higher risk to maximise returns. It invests primarily in shares, but also includes property, unlisted equities, infrastructure and alternatives that aim to maximise returns by taking greater risk.

Members under age 45 with a super account who don’t make an investment choice, are automatically invested in the Aggressive investment option. It aims to achieve an investment return 4.0% above that of the Consumer Price Index (CPI) after tax and investment costs, over any 10-year period, (CPI + 4.0%).

Growth

The Growth option also invests mainly in shares, property, unlisted equities, infrastructure and alternatives that aim to maximise returns by taking greater risk. However, it also invests a portion of its portfolio in bonds, which reduce some of the short-term risk, but generally provide lower long‑term returns.

Members with a super account who are between ages 45 and 54, and don’t make an investment choice, are automatically invested in the Growth option. Its target is to achieve an investment return of CPI + 3.5%.

Balanced

The Balanced option seeks to maintain a broadly diversified portfolio incorporating both growth and defensive assets in order to provide more consistent returns over a long period.

Members with a super account who are between 55 and 64 years old and haven’t made an investment choice are automatically invested in Balanced. It aims to achieve an investment return of CPI + 2.5%.

Stable

Investing in a range of predominantly defensive assets including cash, bonds and defensive alternative assets, the Stable option has the lowest exposure to growth assets. It delivers lower short-term risk, but generally provides lower long-term returns.

Members with a super account who are 65 or over and haven’t made an investment choice are automatically invested in the Stable option. It aims to achieve an investment return of CPI + 1.5%.

Single asset class investment options

In addition to the four pre-mixed investment options outlined above, Mine Super also offers six single asset class investment options, to allow you to determine your own asset class allocation.

What should I do now?

Before deciding which investment options are appropriate for you, it’s important to be familiar with basic investment concepts and work out your savings goal, risk tolerance and investment time frame.

You can choose a diversified option or single asset class option(s) that best meet your own financial goals. If you’re a member with a super account and don’t make a choice, then Mine Super’s default lifecycle will invest your savings in the applicable option for your age, and will move you to lower risk options as you get older.

Looking for advice? Advisers from Mine Super Financial Advice can help you get clear about your goals and help you make a plan to achieve them. Mine Super members are entitled to a complimentary initial consultation. Find out more here.

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