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The right place to put your super

Sinking global financial markets and worries about the US-China trade war are prompting some Australians to wonder whether their superannuation sits in the right investment option. Share markets in the US, Asia and Europe have dropped up to 8 per cent in a month. Aussie shares have climbed since the election but several analysts say our stocks now look overvalued. 

Much of Australians’ super is invested in high-growth assets such as shares and property, but there is no definitive right answer about the best investment mix for you. It will depend on your age, your financial aims and whether you can handle short-term volatility in return for long-term gains, super specialists say. The CEO of the Association of Superannuation Funds of Australia, Martin Fahy, said asset mixes varied between funds, but as a general guide:

•        Conservative investment options had about 30 per cent in shares and property, with the majority in fixed interest and cash.

•        Balanced options invested about 70 per cent in shares and property.

•        Growth options put around 85 per cent into shares or property, aiming for higher long-term returns.

“The right super fund option to be in right now should be the one you are comfortable to be in over the medium or long term,” Dr Fahy said. “Even investment professionals cannot pick when there will be a market downturn or upturn.”

Many super fund members panicked during the 2008-09 global financial crisis and sold out of higher-growth investments, only to miss the rebound over the past decade. Dr Fahy said people should first find out how their money was invested now.

“If you have not chosen, you are likely to have been defaulted into a balanced option,” he said. “However, some funds have a life cycle profile for default members, meaning the older you are, the more conservative the investment mix.”

MLC portfolio specialist John Owen said people in their 20s and 30s could afford to consider higher-growth assets because they had time on their side to recover from downturns. “They can exploit a market decline by increasing their super contributions via salary sacrifice which enables them to buy more units in their super fund at lower prices,” he said.

“For someone in their late 50s or early 60s who are approaching retirement, falling markets are a bigger issue as the value of their portfolio could decline as a result.”

Mr Owen said super fund performance surveys showing average annual returns provided useful information but should not be relied upon completely. “This is because past performance says very little if anything about what will occur in the future,” he said.

Super savers should work out what they need to retire. Online calculators at let you enter your current super balances and investment options and project how it should grow.

“Superannuation is complicated, as is tax and insurance, so making an informed choice could be challenging,” Mr Owen said. “It may be useful to access the services of a qualified financial adviser who can help you choose.”

This article was originally published in MoneySaver HQ.

Important information and disclaimer

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.

While it is believed the information in this publication is accurate and reliable, the accuracy of that information is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of the NAB Group, nor their employees or directors gives any warranty of accuracy, or accepts any responsibility for errors or omissions in this document.

Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.


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