Investment Choice
What's the right investment strategy?
Choosing a strategy lets you adapt your super to your personal situation. From your first job till you retire could easily be 30-40 years, with perhaps another 20-30 years after you retire. Over that time your living standards are likely to rise. Your investment strategy will influence how much income you'll have to retire on.
For this reason, super's a long-term investment that usually suits a 'growth' or 'balanced' strategy, investing in shares and property.
The trade-off against the higher return of a higher risk strategy is losses in bad years. Over 30-40 years, it's likely that any growth strategy will lose money in at least 4-6 years. That will hurt, and when you get more than one bad year in a row you may think you chose the wrong strategy.
Historically, over any 20-year period, a 'growth' or 'balanced' strategy has been the only way to keep up with rising living standards. You must decide if the likely rewards are worth the risk.
Factors that you will want to consider when choosing your investment strategy include:
- your age
- how comfortable you are with investment risk
- how long you intend to contribute to your super fund.
A lower-risk, lower-return strategy ('capital guaranteed' or 'capital stable') could suit people who need greater security and less risk, for example if you're withdrawing all your super in less than 5 years' time and you want to be sure about how much money you'll have.
Here's an example to show how the risk-reward trade-off works, when even small differences in returns over a long time really add up because an extra 2% over 20 years earned another $10,000.
| Rate of return for 20 years, reinvesting all returns |
Start with |
Finish with |
| 4% per year |
$10,000 |
$22,000 |
| 6% per year |
$10,000 |
$32,000 |
| An extra 2% over 20 years earned another $10,000 |
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Source: ASIC website 2009
Eleven investment options
WA Local Super offers 11 investment options. Each option provides different objectives, strategies and risk/return profiles. The 3 diversified options invest in a pre-determined mix of the different asset classes, while the 8 sector-specific options invest in one particular asset class. You can invest in any number of the investment options at one time. The option(s) you choose to invest in are known collectively as your "investment strategy". You can change your investment strategy. We call that "switching".
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3 Diversified Options
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Diversified High Growth
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Diversified Moderate
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Diversified Conservative
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8 Sector-Specific Options
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Australian Listed and Private Equities
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Global Listed and Private equities
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Australian Listed Equities
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Global Listed equities
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Sustainable Future
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Property and Infrastructure
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Bonds and Yield
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Cash
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For more detail about the Investment options please read the Product Disclosure Statement
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Changing Your Investment Strategy
Your first two switches each financial year are free. Any switches after that will cost $50.00 per switch. If you are making contributions to your super and you would like to change the investment strategy into which those contributions are placed, you can do that online in the secure member area.
However, switches for your existing account balance can only be done by completing a Change in Investment options form which is available from the Member Forms and Publications page.
Timing the market?
Superannuation is a long term investment. It is time in the market rather than trying to time the market that produces better results.
History shows that members who regularly switch investment options, trying to pick the right time in a particular asset class invariably get it wrong and end up worse off than those who select an investment strategy that suits their risk profile and stick with it.
If timing the market was easy, wouldn't we all be retired by now with billions in the bank?
The default option
If you don't nominate a preferred investment option(s) when you first join the Fund, your account balance and all contributions and roll-overs will be invested into the Diversified Moderate option, until you notify us otherwise. This is the Fund's "default option".
If you were a member of the Plan prior to 1 July 1999 and have not nominated a preferred investment option(s), your account balance and all contributions would be invested into the Diversified Conservative option (formerly called the Capital Stable option).