Superannuation investment options

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Choosing your investment options within superannuation

How you manage your money within superannuation over the long term can make a big difference to your final balance. For some people, superannuation will be their largest pool of wealth so the decisions you make today should not be taken lightly.

Most super funds have a number of investment options you can choose from. Making an active choice means selecting an investment option or investment options based on your own personal circumstances that takes into consideration the strategy of the investment, the likely returns and the risks involved. It is important to take the time to compare investment options so you can make an informed decision on what is right for you. If you make no choice your money will be allocated to the default investment option. Over the next two years, MySuper will replace all super fund default investment options.

Three things to take into consideration when choosing an investment option:

  • Your age
  • How comfortable you are with risk
  • Your personal retirement goals

Your timeframe will play a major role in the decision you make. In general, the longer your timeframe for investing in super the more likelihood that growth investment options would suit you. These options can help you grow your super balance, despite some volatility, as the returns are most likely to beat inflation over the long term. If you have a short timeframe until retirement the focus may be on preserving capital and conservative investment options could be more suitable.

Keeping in mind that super is a long term investment, it is not recommended that you just set and forget. As your needs and circumstances change along the way you can change your investment options.

As a Corporate Superannuation Relationship Manager of a large superannuation fund, I work alongside many Corporate Superannuation Consultants to add value to our members. Of these, I find that the companies that work with Harvest are the most active and engaged when it comes to making additional contributions to their superannuation, actively choosing their investment options, and accessing their superannuation online to take control of their superannuation.

Tailored advice can increase your investment returns

We suggest you take the time to meet with a Harvest advisor to get a personally tailored investment selection for your super. The following example, for the period of 1 July 2014 to 30 June 2015, shows just what this could mean for you if you had chosen a ‘growth’ profile.

If you made no selection at all, your super goes to a default super fund and would have produced the following return:

Median ‘growth’ MySuper returns*                           9.51% p.a.

If you sought advice for a tailored investment selection you could have received the following return (averaged over 42 current members on the ‘balanced/growth’ profile):

Tailored investment selection – growth**                11.07% p.a.

In the case of these 42 current members, the value of tailoring their investments and gaining an additional 1.56% p.a. for the year to 30 June 2015 was on average $1,750 additional super, ranging from $110 to $5,182 extra super for an individual.
*Source: My Super Index Survey (Single Options) net returns for 1 year period to 30 June 2015
**Members who have selected investment options with advice from Harvest

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About the Author:

Mario Isaias
Mario has specialised in corporate superannuation and financial advice for the past 25 years, after beginning his career as a Chartered Accountant. He provides advice to companies with corporate super funds and his advice spans other employee benefits including group insurances and employee wealth plans. Mario holds a Bachelor of Economics from the University of Sydney, a Diploma in Superannuation Management from Macquarie University, is a Fellow of FINSIA and is a Financial Planning Specialist with the Institute of Chartered Accountants of Australia and New Zealand. He provides advice to trustees and companies of large corporate super funds (including defined benefit funds). His advice also covers other employee benefits including group insurances and employee share plans. Mario has spoken at numerous industry seminars over the past 25 years with the Association of Superannuation Funds of Australia and the Institute of Chartered Accountants. Mario holds a Bachelor of Economics from the University of Sydney, a Diploma in Superannuation Management from Macquarie University, is a Fellow of the Financial Services Institute of Australasia and is a financial planning specialist with the Institute of Chartered Accountants of Australia.