Changing investment options can impact your investment returns and retirement balance.
It can be a good idea to reflect on why you want to change investment options before you take action. Here are some things to consider.
Actions you take today can impact your future balance
Everyone has a different tolerance for risk. What’s yours?
When it comes to investing your super, there’s a trade-off between short-term fluctuations in returns and higher potential longer term returns.
Watching your super balance go up and down can be unsettling. If you find it hard to sleep at night when markets are volatile, you probably have a low tolerance for risk. If the markets ups and downs don’t bother you, as you’re more focused on long-term growth, you probably have a higher tolerance for risk.
Factors that may impact your risk tolerance level include:
- Age
- Your account balance
- Your lifestyle goals and retirement income needs
- Your personality – are you a risk taker or prefer a more conservative approach?
- Your investment time frame
One way you can measure your risk tolerance is by looking at how often you’re willing to accept a negative return. We publish the risk of a negative annual return for each investment option in our Investment Guide
Investment guide - pdf, 3.1MB
What’s your investment timeframe?
Your investment timeframe is one of the most important factors to consider when choosing your investment options. It’s how long you’re planning to keep your super invested before and after you retire.
Some people take their super as a lump sum when they retire. Others convert it into a regular income through an account-based pension. Keeping it invested helps your money grow, while providing you with a regular income.
Your super might need to last longer than you think
Here’s how long your super might need to last based on your current age and average life expectancies. These timeframes are indicative only, and are for members planning to keep their super invested their whole life. Your timeframe will be shorter if you access your super earlier, for example, you decide to take your super as a lump sum at retirement.
* Average life expectancies based on Australian Bureau of Statistics, Life Tables, Australia, 2020–2022. Release date: November 2023.
See how risk levels change with your investment timeframe
Short term risks are different to long term risks. This means investment options will have different levels of risk over different timeframes. Here’s a couple of examples to show you how the risk levels change over the short and long term. Our investment guide has more information on risk.
The risk level of investment options change depending on your timeframe*
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5 years or less
If you’re planning to access your retirement savings soon you may be more concerned about protecting your savings than growing them.
Consider investment options with lower short-term market risk levels. They have very little or no expectation of a negative returns in any year. With a short investment horizon you have less time to recover from periods of negative returns if they occur.
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20 years or more
If you’re not planning to access your savings for a long time, you may be more focused on growing your savings and maximising returns.
Consider options with lower long-term risk levels. They’re designed to outgrow inflation over the long term, although they’re more likely to have negative returns over the short term. With a long investment horizon you have more time to recover from short term losses if they occur.
Do you want to leave the investment decisions to us, or be more hands on?
If you’re in one of our PreMixed options you don’t need to worry about monitoring markets and managing your investments as we do it for you. Our investment team constantly monitors a range of indicators to look for changes in the investment outlook. They adjust the allocation to different assets to make the most of the current and future environment and seek to maximise your long-term returns in that option.
If you choose our DIY Mix options or Member Direct you’ll need to make some of these investment decisions yourself. These options are designed for members who want more control and have the time and knowledge to manage their own investment strategy.
Seek help if you’re not sure what to do
If you’re not sure which investment option is right for you, it may be worthwhile speaking to a financial adviser. An adviser can help you choose the right investment option for your needs. They can also help provide guidance during times of uncertainty so you can stay focused on your long-term plan.