Can I change my investment options within my superannuation fund?

Understanding Investment Options

Superannuation funds typically provide a range of pre-mixed investment options catering to different risk profiles. These options vary in their asset allocation, which is the proportion of your super invested in different asset classes like shares (Australian and international), property, fixed interest (bonds), and cash.

• Growth options: Prioritize capital growth by investing heavily in shares and property (around 85%). This option targets higher long-term returns but comes with the potential for greater losses during market downturns.
• Balanced options: Offer a blend of growth and stability, typically with a 60/40 or 70/30 split between growth assets and defensive assets like fixed interest and cash. This option aims for moderate returns with a reduced risk of significant losses.
• Conservative options: Focus on capital preservation with a high allocation (around 70%) towards fixed interest and cash. While offering lower returns, this option minimizes risk and potential losses.
• Cash options: Invest solely in cash or cash-equivalent assets, guaranteeing principal security but yielding minimal returns.

Factors to Consider Before Switching

Deciding to change your investment options requires careful consideration of several factors:

• Risk tolerance: Evaluate your comfort level with potential losses. Growth options offer higher potential returns but come with greater risk, while conservative options prioritize security with lower returns.
• Investment time horizon: The closer you are to retirement, the less time your super has to recover from market fluctuations. A conservative approach might be more suitable nearing retirement.
• Investment goals: Consider your desired retirement lifestyle and the amount of super you need to achieve it. Growth options may be suitable for ambitious goals, while conservative options might be appropriate for a simpler lifestyle.
• Current market conditions: Economic cycles can influence investment decisions. During downturns, a temporary shift to a more conservative option might be prudent.
• Fees and costs: Each investment option may have associated fees that can impact your overall returns. Research and compare fees before making a switch.

Making the Change

Most super funds allow you to change your investment options online through their member portal. The process is generally straightforward:

1. Log in to your super fund’s member portal.
2. Navigate to the investment section.
3. Review the available investment options and their investment objectives, asset allocations, and fees.
4. Select your desired investment option(s).
5. Choose how you want to allocate your existing balance and future contributions.
6. Submit your investment change request.

Additional Considerations

• Frequency of switching: While some flexibility is beneficial, excessive switching can incur transaction costs and potentially harm your long-term returns.
• Financial advice: For personalized guidance, consider consulting a financial advisor who can assess your individual circumstances and recommend suitable investment options within your super fund.
• Tax implications: Changing investment options generally does not trigger any tax implications. However, consult with a tax professional for comprehensive advice.

Conclusion

The ability to adjust your investment options empowers you to manage your superannuation and optimize its growth potential. By carefully considering your risk tolerance, investment goals, and market conditions, you can make informed decisions that contribute to a secure and comfortable retirement. Remember, super is a long-term investment; focus on a strategy that aligns with your overall financial goals.