Investment basics

Learning a few basic investment principles will help you understand your options so you can set yourself up for a stronger financial future.

For most people superannuation is a long term investment. That’s because you are generally unable to access your money until you retire after reaching your preservation age.

Identify your goals and start planning

Even if retirement is just around the corner, your super investment may need to last 20 to 30 years or more after that. Identifying your needs, retirement goals and how long you have to achieve them is fundamental to a successful retirement plan and will help you when choosing an investment strategy.

Understanding investment risk and return

How much you have in retirement and how long it lasts depends on the amount of money you and your employer put into super, how much that money earns through investment returns and the impact of fees and taxes.

Investing for long periods generally means you can afford to take more risk and potentially benefit from higher investment returns. If your timeframe is shorter you might need to consider reducing your risk and potentially receive lower returns.

The level of risk appropriate for you will depend on a range of factors including your age, your investment timeframe, where other parts of your wealth are invested, how comfortable you are about the possibility of lower returns in some years and the amount of risk you need to take in order to reach your financial goals.

Super, like all investments, carries some risk. Most people are aware that there is the possibility of losing some of your money when share markets decline, or when currency exchange rates or interest rates change.

But there is another risk—the risk that the value of your investment won’t keep up with inflation and will lose purchasing power over time.

Each asset class performs differently and carries different risks. Asset classes that have a higher risk of negative returns generally produce higher returns over the long term. In return for higher investment earnings though, you have a higher short term risk of loss, as these investments regularly rise and fall in value.

Some of the risks considered are shown below. Note that this is not an exhaustive listing of risks.

Some forms of investment risk include:

Investing in volatile markets

Together with our investment managers, we continually monitor and evaluate these risks with the goal of maximising investment returns with acceptable risk profiles for each investment option.

All investments carry some level of risk. To help you manage your investment risk, the Fund allows you to choose from a range of investment options.

Here are our tips for investing in volatile markets.