The investment options you choose for your super could affect your retirement savings. More than half of Australians have their super in a default option where the underlying investment strategy may not be in line with personal goals. Choosing where to invest your money is a difficult decision and will depend on many factors such as your overall investment objectives, risk profile and the amount of time you have to invest.
Some of the main considerations you may need to take into account include:
Saving for retirement is a long-term goal. In your younger working years, your super contributions will grow significantly over time, and are the foundation for your retirement income. It usually makes sense in the younger years to focus on higher growth assets like shares, which typically have healthy long-term returns.
Moving closer to retirement, where the length of time for super contributions is now less, you may consider moving to more balanced investment options, where you have the opportunity to invest in lower risk assets.
As you approach or are in retirement, accessing your investment as an income stream, generating a little growth and capital preservation become increasingly important.
No investment is completely risk free, but some carry more risk than others. In general, the greater the amount of risk an investor is willing to take, the greater the potential return.
Everyone has a different appetite for risk. Some of us may be comfortable investing in high-risk assets such as shares whilst others may prefer investing in low-risk assets such as term deposits.
Before determining your risk appetite, it’s important to understand the risk return trade off. Put simply, the more risk you are willing to take, the higher your potential rewards may be. However, higher returns come with higher risk that the value of your investment may fall.
It’s important that you understand your own risk appetite and that your super is invested in a way that suits your comfort level of risk whilst still helping you achieve personal goals.
The Fiducian Superannuation Service is a streamlined superannuation master trust designed to help you build and manage your wealth before and after retirement. Its flexible structure allows you to implement the investment strategies that suit your risk requirements, investment time frame and growth and income needs
Its many features and benefits include: