Get Interested in Your Super

Even though most people are able to choose their super fund, the vast majority of employees have not exercised choice and have remained with their employers default fund, and have stayed with their current super funds default investment option.

It is this second point which worries me. Choosing the right investment option within your super fund is a key ingredient to achieving your retirement cash flow needs.

Many super funds default options are called ‘balanced’ or ‘diversified’. These funds have a reasonably large allocation to shares and property.

Most super funds have a broad range of investment options to choose from, ranging from secure options for those nearing retirement, to more aggressive options for those with many years to go before they can access their money.

The more aggressive options normally are more heavily invested in shares and property, assets which give the best long-term return potential, but experience the greatest short term fluctuations in returns.

This is no secret; it is the way that it is. Share and Property Markets move in cycles, some good years, some poor years, but over the long term should provide superior returns over more conservative options such as cash.

If you are investing for the long term, and you can withstand the expected short-term fluctuations in share and property investments, then you should be better off sticking with a more aggressive investment strategy.

If you are not investing for the long term, or you can’t withstand investment volatility, then a more conservative approach is probably better for you.

For most people, their employer super fund will grow to be their biggest asset. Get interested in your employer super fund, especially what investment option you have chosen. Ask questions, seek advice, and set a strategy to achieve your retirement needs.