Understanding your super investment options doesn’t need to feel overwhelming or complex.

At Verve, we want you to feel empowered and ready to make your super work for you. So read on for our simplified essentials to help you take charge of your financial future.

Part one is all about feeling informed and part two helps you take steps for action – so you can make investment choices that suit your goals.

Because your super should work for you, not the other way around!

Different investment strategies may be suitable for different ages.

In your 20’s and 30’s taking more risk is, generally, the right approach as you have time to recover from negative market movements and benefit from gains. As you approach retirement, you might prefer to dial back that level of risk to avoid losses at a critical time.

Putting your super into cash is a safe option.

While cash investments are generally low in risk and protect against short-term losses, they also offer lower returns. Being too conservative, or reacting to market movements with anxiety or panic can mean missing out on potential growth or market recovery, which could reduce the amount of super you have at retirement.

Super can feel like a different language! Here’s a breakdown of terms you’ll come across:

• Risk = the degree of uncertainty, or potential for loss in an investment

• Return = the money made, or lost, on an investment over a given period of time

• Asset allocation = the mix of investments in your super (eg. shares, property, cash)

• Earnings = the returns your super investments generate

• Liquidity = how quickly an asset can be converted into cash

• Volatility = the degree to which an investment’s price fluctuates over time

• Growth assets = investments like shares and property which aim for higher returns

• Defensive assets = investments like bonds and cash which offer more stable, lower returns

• Diversification = sharing investments across different types of asset classes and investments to protect your portfolio (the classic “don’t put all your eggs in one basket” approach!) 

Investing can often involve trade offs: risk vs reward. Generally, risky investments have the potential for higher returns – but they come with more ups and downs (volatility).

Choosing the “right” risk level for you depends on two things: your comfort level with market ups and downs, and how far away you are from retirement.

Super is not simply a savings account. It’s a place where you can invest and grow your money, for the long term. It’s also a low tax environment. Taking no risk in your super can mean missing out on returns – your money needs to work as hard as you do!

When considering investment risk it can be helpful to consider your goals - are you aiming to grow your super balance over time, or are you mainly focused on preserving what you have already saved? As super is for the long term, investing for growth is often a key focus.

Did you know that by the time your retire, 50% or more of your total account balance could be made up of investment earnings? (Super Guide 2023)

Investing for growth means accepting that market ups and downs will happen. These are a normal part of investing – and they shouldn’t keep you up at night. Even as you approach retirement phase (age 60+), growth assets still play a role – because you could be retired for 20 or 30 years, or (hopefully) even longer! Your super might need to keep working hard, long after you stop working.

If markets fall just as you retire and start drawing down your super, it can be hard to recover. This is known as sequencing risk – because the order in which returns and withdrawals occur can have a profound impact at retirement. That is why, as you get older, it can be wise to gradually reduce (not eliminate) your exposure to higher risk investments, rather than all at once.

Longevity risk is the risk that you will outlive your retirement savings. You might live longer than you think (great news!) but your money needs to keep up. This becomes even more relevant for people who plan to retire early. Balancing these risks means it is important to find the right combination of more defensive assets, and long term growth to help your money last through your retirement years.

Verve Super has a range of investment options to help you balance your goals and risk preferences. Each investment option has a combination of growth and defensive assets. All Verve investments options have ethical investment screens applied, so you don’t need to worry that your super is invested in something that doesn’t align with your values.

You can see the growth and defensive asset mix on our website, here.

You will notice that the unique Verve Gender Equity investment option is 100% growth focused, containing a mix of Australian shares. Balancing this investment with other Verve options will help you ensure diversity and meet your risk preferences.

Diversity in your super investments is important. Having a mix of assets, such as shares, cash, property and bonds, is a way to help your money perform well. If one type of investment performs poorly, others may perform well – helping to balance and smooth out returns over time and protect your savings from being exposed to a single market or asset type. As the saying goes, you don’t want all your eggs in one basket!

Having options available can bring about feelings of overwhelm, procrastination or worry for some people. Making choices with your super investments is important and you want to get it right!

With the right knowledge and support you can make investment choices that suit your goals.

Help is available – you don’t need to go through it alone!  Whether you have some ideas about your investments and retirement plans, or need to start at the basics, our coaching team is only a call away.

• What does retirement look like for you?

• What age do you want to stop working?

• How much will you need to live the life you want?

Taking the time to think about your retirement will help you formulate a plan and set a meaningful savings goal for your super.

ACTION Take a look at the Money Smart Retirement calculators to consider your own numbers.

Life changes—and so should your investment strategy. Reviewing your investment mix periodically or when your circumstances change helps you ensure your investments match your goals and risk profile.

ACTION Set a diary reminder or phone alarm to remind you to check in on your super and investments like you would book in a check up with the dentist. About once a quarter or every 6 months is enough, after all it’s a long term investment.

If you’re unsure about the right mix of investments, our Coach team is here to help. They can talk to you about your risk preferences, your retirement goals and help you structure your investments in Verve Super. 

ACTION: Contact a Verve Super Coach to talk through your goals and tailor your investments to suit.

Choosing the right investments in super is about finding what’s right for you. A little time spent reviewing your choices today can lead to greater peace of mind for your future.