Mozo guides

How is my super being invested? Does it matter?

Person and her dog are sitting at her computer and looking at how her super is being invested

It pays to know where your nest egg is being invested, not only to get the most out of your super fund in retirement, but to make sure the selected investments meet your expectations. 

So, yes, it does matter where your super is parked. Let’s take a closer look at the types of investments that can be made.

Types of super investments

Some of Australia’s biggest super funds are currently under fire for investing members’ super in the gambling industry, despite the fund proclaiming that they’re “socially aware.”

Whether or not these funds are producing good returns isn’t the point here (though that is of course important!). Super investments should also be made as advertised and so it’s good to double check the product disclosure statement (PDS) of your super fund to better understand your fund’s approach. What might be viewed as socially aware or ethical by a given fund, might not exactly line up with the definition of those terms.

The PDS is usually found on the website of your super provider and it should outline the features, risks, benefits and cost of investing in products with your super fund. 

Take a close look at this document to ensure you understand the company’s approach to investment, and also accept the terms and conditions your provider has laid out. The chosen strategy could have an impact on the performance of your fund and ultimately, how much you’re able to retire with.

How investment strategies shape your super

Two people are looking at how investment strategies shape superannuation on a tablet

Firstly, investment choices in super should be about your own personal level of comfort. Your fund will typically offer pre-mixed options to make the task of choosing easier, and we’ll touch on these below. 

But there are also sometimes options to mix different asset types or to pick direct investments. Knowing how to decide or which box to tick comes down to research and understanding your risk appetite. 

There are typically five pre-mixed investment options in super: 

  • High growth
  • Conservative
  • Balanced 
  • Ethical
  • Cash

Let’s look at these very briefly.

Taking on a high growth approach (usually 85% in share or property, 15% in fixed interest and cash) might mean that you receive better returns but at a higher level of risk, with losses typically more frequent and heavier than some other investment types. 

High growth is generally suitable for Aussies just starting out in their career, as this way of investing means that you’ll likely have enough time to recover from any losses.

Conversely, a conservative mix (usually 30% in shares or property, 70% in fixed interest and cash) could lead to more stable, yet lower returns. This is typically the preferred strategy for Aussies nearing retirement as a way to preserve accumulated super. While losses can still occur, there’s usually a lower level of risk involved. Additionally, when losses occur they can be smaller than in some investment types. 

There’s also a balanced option (usually 70% in share or property, 30% fixed interest and cash), which lies somewhere in between the two. As the name suggests, this approach might be split 50/50 in terms of risk, or lean slightly one way or the other. It’s something that you may want to consider if you’re in the middle of your career. 

Another investment type is ethical, which aims to screen out companies that don’t adhere to environmental, social and governance standards. This might include opting for renewable energy as an asset as opposed to coal mining, for example. While it’s possible that you’ll pay more in fees than some other investment types, your returns could make up for it. 

Lastly, you could have 100% invested in cash, which is basically all your money with deposit taking institutions, or in a capital guaranteed life insurance policy.

Knowing your super investments

Group of people are looking at some charts on a whiteboard to learn about superannuation investments

As it stands, the Australian Prudential Regulation Authority (APRA) aims to give members more transparency when it comes to super investments. Remember to read through the PDS carefully, especially if you’re thinking about changing super funds.

By knowing how your super fund is making its investments, you can make a more informed decision. In saying that, it’s also worth reaching out to a financial adviser to help you map out your retirement goals and how you might achieve them with super. 

Interested to find out more about how the world of super works? Browse our superannuation guides hub and start planning for your future as you learn about super topics ranging from what the super preservation age is to how superannuation can fit into your retirement planning.

Sophie Wong
Sophie Wong
Money writer

Coming from a background in financial services and criminology, Sophie strives to get others excited about their money journey as they reach their financial goals. She aims to make things like budgeting a fulfilling achievement rather than a dreaded task.