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Super is designed to help you retire in comfort and safety, so it makes sense to take care of it.

If you've never deliberately changed how your super fund invests your super, your money is probably being invested using one of your fund’s default investment options. This isn't necessarily a bad thing, but it might not be the best choice to suit your financial goals and current appetite for risk or safety.

Like any type of investment, you've got a wide range of super investment options available to you. You can choose the type of option that suits you best: from a conservative approach up to a more growth-focused approach. Even if retirement seems a long way off, thinking about how super can help you early can make a difference to your super balance once it's time to retire – so lets have a look at your options.

Growth investment options

A growth super investment mix is focused on creating the highest average returns possible over the long-term. This means they come with the risk of higher losses in bad years.

Growth investment options often have investment mixes of around 85% in high-risk assets like shares or property, with the remaining 15% in ‘safer’ assets like fixed interest bonds or cash. Some super funds have ‘high growth’ investment options with up to 100% investment in high-risk assets.

Generally speaking, these investment options are suitable for younger people who have longer to ride the ups-and-downs of the market than an older person has. It is often recommended that you stick with this type of investment option for a long period of around seven to 10 years – that way, average growth is most likely to offset any years where you may have seen losses.

Balanced investment options

If you haven’t selected an investment option, your super fund has likely placed your money into a balanced investment option by default. This isn’t necessarily a bad thing and might be the best option to suit your needs depending on your situation – but it doesn’t hurt to know what else is out there.

Balanced options have a lower level of risk than growth-focused options, but can have lower returns — though they are designed to reduce losses when markets aren’t performing. These usually have anywhere between 50-70% invested in volatile assets like shares or property, with the remaining amount invested into assets like fixed interest bonds or cash.

Conservative investment options

Conservative investment options are designed to reduce the risk of loss, but usually have lower returns when compared to the performance of growth and balanced investment options over the long term. This investment option is usually embraced by people approaching retirement – greater losses caused by a financial downturn would have significantly worse impacts for them than for a younger person who could wait out the ups-and-downs of the market.

This type of investment option usually has an asset mix of around 30% in growth-focused assets like shares and property, with the remaining 70% in relatively safe investments like fixed interest bonds and cash.

Cash investment options

If you're very close to retirement, you might not be focused on earning an investment return and just want to keep your super balance stable. A cash investment option is designed to keep your super as safe as possible with extremely low-risk investment with the compromise of low- or zero-returns.

This investment option is pretty much what it says on the box – 100% of your super is invested in defensive assets like deposits with Australian deposit-taking institutions (i.e. banks, credit unions, building societies) or in a 'capital guaranteed' life insurance policy.

Ethical investment options

If you want your super to be only invested in socially and environmentally responsible companies, an ethical super investment option might suit your needs. These can be anywhere between growth-focused or conservative, but the binding rules are that your money will only be invested in companies which meet certain commitments to environmental, social and governance standards. Not every super fund will offer ethical investment options and not all of them carry the same level of risk. You will need to assess each ethical option individually to determine which one best meets your own desired balance of returns and safety.

Finding the right super investment option for me

This mix of investments that's right for one person might not be the same for the next person. When comparing super investment options, it's a good idea to compare factors like fees and insurance offerings and consider the impact of external market forces. You should also look internally and consider your own age, comfort with investment risk, and how long it will be before you need to access your funds.

If you aren't sure exactly what investment options are available to you, you can always check the website of your particular super fund for more information. There are also comparison sites which can help you make a decision — just be aware that they might earn a commission or be incentivised to encourage you to choose particular super funds.

If you want to get a better understanding of different super fund options, you can check out our article on comparing different types of super funds for more information.

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