Your super fund's investment option determines how your money is invested — and over a 30–40 year career, this choice matters far more than most people realise. The difference between a conservative and a growth portfolio over 30 years can easily be $200,000 or more on the same contributions.
Understanding risk and return
All super funds offer a range of investment options, from defensive (low risk, lower returns) to aggressive (higher risk, higher returns). The default MySuper option is typically a "Balanced" portfolio — roughly 60–70% growth assets (shares, property, infrastructure) and 30–40% defensive assets (bonds, cash).
Common investment options
| Option | Growth/defensive split | Typical 10-yr return | Negative years in 20 | Best for |
|---|---|---|---|---|
| High Growth | 90/10 | 8.5–10% | 3–5 | Under 40, long time horizon |
| Growth | 80/20 | 7.5–9% | 3–4 | 30–50, comfortable with volatility |
| Balanced (MySuper) | 65–70/30–35 | 7–8.5% | 2–3 | Default for most Australians |
| Conservative | 30–40/60–70 | 5–6.5% | 1–2 | Near retirement, low risk tolerance |
| Cash | 0/100 | 2–3% | 0 | Very short term, capital preservation |
Returns are indicative based on historical industry averages. Past performance is not a reliable indicator of future performance.
The cost of being too conservative
Many Australians — particularly younger members — are in Balanced when they should be in Growth or High Growth. A 25-year-old with 40 years until retirement has time to ride out market downturns and capture the higher long-term returns of growth assets.
• Balanced at 7.5% = $1,440,000 at age 65
• High Growth at 9% = $1,885,000 at age 65
Difference: $445,000 — just from choosing a different investment option in your 20s.
Lifecycle vs fixed allocation
Some funds offer lifecycle options that automatically shift from growth-heavy to defensive as you approach retirement. These are convenient but may be too conservative for people who plan to stay invested through retirement (which most people do — your super doesn't all get withdrawn on day one of retirement).
If you're comfortable making your own choice, a fixed allocation that you review every 5–10 years gives you more control.
Indexed vs actively managed
- Indexed (passive): Tracks a market index (e.g. ASX 300, MSCI World). Very low fees (0.02%–0.10%). No attempt to beat the market.
- Active: Fund managers select investments aiming to outperform the index. Higher fees (0.30%–0.80%). Some consistently beat the index; many don't.
Research consistently shows that most active managers underperform their benchmarks after fees over 10+ year periods. An indexed option at 0.05% fees vs an active option at 0.60% fees saves you 0.55% per year — roughly $55,000 over 30 years on a $50,000 starting balance.
Investment strategy by life stage
| Age | Suggested approach | Typical allocation |
|---|---|---|
| 20–35 | High Growth — maximise long-term returns, time to recover from downturns | 85–100% growth |
| 35–50 | Growth — still decades to retirement, tolerate some volatility | 75–90% growth |
| 50–60 | Balanced to Growth — begin considering downside protection as retirement nears | 60–80% growth |
| 60–67 | Balanced — moderate risk, start thinking about income needs | 50–70% growth |
| 67+ | Balanced to Conservative — income-focused, but still need growth to fund 20–30 years of retirement | 40–60% growth |
How to change your investment option
Log into your super fund's member portal. Most funds let you change investment options online with a few clicks. There's usually no fee (apart from any buy-sell spread). Changes typically take effect within a few business days. You can split your balance across multiple options if you wish.