Know your risk profile

Super and investments 101 | Date Posted: 20 December 2021

As a member of Mine Super, you have choice when it comes to investing your retirement nest egg, with six pre-mixed options as well as single asset class investment options. But 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. In this article we focus on risk tolerance. 

When discussing investment risk, we often think about the chance of losing money. However, risk can also mean not having enough super when you retire. Generally speaking, investments can be classified as defensive (lower risk) or growth (higher risk), and usually there’s a link between risk and return – a member with a high-risk tolerance is more likely to prefer higher returns at the cost of greater variability in the value of their savings, while someone with a lower risk tolerance will accept lower overall returns to keep the value of their savings more stable.

Standard Risk Measure

We use the Standard Risk Measure (SRM) for our investment options, which allows you to compare investment options’ risk by considering the number of negative annual returns expected over any 20 year period. Each investment option is placed into one of seven risk labels, ranging from very low to very high. It’s important to note that while the SRM can help you understand your investment risk, it shouldn’t be the only consideration. For example, the SRM doesn’t show you:

  • how big a negative return will be;
  • whether you’ll get the returns you’re after; and
  • how fees and taxes will impact your return.

Whether you’re working, approaching retirement or are already retired, you also need to consider:

  • your age and how long you intend to invest for;
  • your tolerance to volatility (the ups and downs in investment markets);
  • other investments you have;
  • future financial plans; and
  • your attitude to the different type of investments.

If you don’t make an investment choice

If you have a super account with Mine Super and haven’t made an investment choice, you’re invested in our Lifecycle Investment Strategy (LIS). The objective of the strategy is simple: to give you significant exposure to growth assets such as shares in the early stages of your working life, and then gradually reduce this as you get older by increasing your exposure to defensive assets such as bonds and cash. This helps provide less volatile investment returns as you get older, as you can see in the examples below.

Super and Pension_Know your risk profile_Article_Mark Smith_@2X
Mark Smith | 34
Invested in Mine Super’s LIS
100% invested in the High Growth investment option (giving you greatest exposure to growth assets in the earlier stages of your working life while you build up your nest egg).
Super and Pension_Know your risk profile_Article_Jon Smith_@2X
Jon Smith | 59
Invested in Mine Super’s LIS
40% Invested in the High Growth investment option and 60% invested in the Conservative Balanced investment option.
Super and Pension_Know your risk profile_Article_Paul Davies_@2X
Paul Davies | 65
Invested in Mine Super’s LIS
100% invested in the Conservative Balanced investment option (giving you greatest exposure to defensive assets at the time you’ll likely start to draw down a pension).

Note: the above examples are based on fictitious persons.

More info

View our investment options for Super or Pension, or go to your online account to view and manage how your money is invested.

Not sure if your investment options are still right for your needs? You can find more info about how to choose the right investments to help reach your goals on the MoneySmart website. You can also talk to a financial adviser who can help assess your risk profile (including your risk tolerance and risk capacity) and structure your investments to suit your needs. 
Did you know? New research shows that a financial adviser may add approx. 5.2% pa to your portfolio*. On a $500,000 investment, that’s $26,000 extra per year!

Turn to Mine

As a member you’re entitled to a complimentary appointment with Mine Super Financial Advice. You can request an appointment online or by contacting us.

*Source: AdviserRatings, 2021 Value of an adviser report, September 2021.