Are you using the right super risk profile?
When you open an account with a super fund it will generally want to know what level of risk you are prepared to take with your investments. This can vary depending on your own approach to risk, and where you are on your superannuation journey.
Generally, the younger you are, the earlier you are on that journey, the more you may be prepared to take on a higher level of risk. As you get closer to retirement, and hopefully have built up a nice balance in your super fund, the more you might be prepared to lower that level of risk in your investments.
When you first set up an account with a super fund you will likely be asked a series of questions to help assess your risk profile. For example, you could be asked about your aims and objectives for your super, and how comfortable you are about losses and gains in your investments over time.
Your risk profile will then be used by your fund provider to determine how your super contributions are invested.
It’s important you keep track of your risk profile as it will likely change over time depending on your circumstances, including your age, how you see your fund perform and what returns you see on your investments.
→Read more: Independent financial advisers and planners in Australia
The most common risk profiles
The government regulator ASIC’s Moneysmart website defines risk as the possibility that your investment may fall in value or earn less than expected.
Every investment carries with it some level of risk. Generally speaking, accepting a higher level of risk is supposed to offer the potential for greater returns on your investments, which could help your super grow at a faster rate.
But with that comes a chance that you may not see such great returns, and may even encounter losses, depending on how your super is invested.
A lower level of risk may lead to slower, steadier growth in your investments, but with less of a risk of losing money.
It’s up to each super fund to determine how it describes the various levels of risk members can choose from. They often use terms such as conservative, balanced, growth and aggressive. They may use other terms but the important thing is to look at how each is described.
Here are a few examples of how each level of risk may be defined.
Conservative: low risk
A conservative investor is one who primarily seeks to minimise the risk of losing their accumulated wealth. They are comfortable in accepting lower returns in exchange for a higher degree of stability.
Balanced: medium risk
A balanced investor seeks to both reduce risks and enhance returns. They are willing to accept modest risks to seek higher long-term returns than a conservative investor.
Growth: high risk
A growth investor values higher long-term returns and is willing to accept considerable risk. They are comfortable with short-term fluctuations and/or losses in exchange for the potential of higher long-term returns than a conservative or balanced investor.
Aggressive: very high risk
An aggressive investor values maximising returns and is willing to accept substantial risk. They may endure extensive volatility and significant losses, particularly in the short-term, in the hope of maximising long-term returns.
Compare Superannuation with Canstar
The table below displays some of the superannuation funds currently available on Canstar’s database for Australians aged 30 to 39 with a super balance of up to $55,000. The results shown are sorted by Star Rating (highest to lowest) and then by 5 year return (highest to lowest). Performance figures shown reflect net investment performance, i.e. net of investment tax, investment management fees and the applicable administration fees based on an account balance of $50,000. To learn more about performance information, click here. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. Use Canstar’s superannuation comparison selector to view a wider range of super funds. Canstar may earn a fee for referrals.
- Performance, fee and other information displayed in the table has been updated from time to time since the rating date and may not reflect the products as rated.
- The performance and fee information shown in the table is for the investment option used by Canstar in rating of the superannuation product.
- Performance information shown is for the historical periods up to 31/01/2024 and investment options noted in the table information.
- Performance figures shown reflect net investment performance, i.e. net of investment tax, investment management fees and the applicable administration fees based on an account balance of $50,000. To learn more about performance information, click here.
- Performance data may not be available for some products. This is indicated in the tables by a note referring the user to the product provider, or by no performance information being shown.
- Please note that all information about performance returns is historical. Past performance should not be relied upon as an indicator of future performance; unit prices and the value of your investment may fall as well as rise.
- Any advice on this page is general and has not taken into account your objectives, financial situation or needs. Consider whether this general financial advice is right for your personal circumstances. You may need financial advice from a qualified adviser. Canstar is not providing a recommendation for your individual circumstances. See our Detailed Disclosure.
- Not all superannuation funds in the market are listed, and the list above may not include all features relevant to you. Canstar is not providing a recommendation for your individual circumstances.
- Canstar may earn a fee for referrals from its website tables, and from Sponsorship or Promotion of certain products. Fees payable by product providers for referrals and Sponsorship or Promotion may vary between providers, website position, and revenue model. Sponsorship or Promotion fees may be higher than referral fees. Sponsored or Promotion products are clearly disclosed as such on website pages. They may appear in a number of areas of the website such as in comparison tables, on hub pages and in articles. Sponsored or Promotion products may be displayed in a fixed position in a table, regardless of the product’s rating, price or other attributes. The table position of a Sponsored or Promoted product does not indicate any ranking or rating by Canstar. For more information please see How We Get Paid.
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Performance and Investment Allocation Differences
- Fee, performance and asset allocation information shown in the table above have been determined according to the investment profile in the Canstar Superannuation Star Ratings methodology.
- Some providers use different age groups for their investment profiles which may result in you being offered or being eligible for a different product to what is displayed in the table. See here for more details.
- Australian Retirement Trust Super Savings’ allocation of funds for investors aged 55-99 differ from Canstar’s methodology – see details here.
- The Australian Retirement Trust Super Savings (formerly Sunsuper for Life) product may appear in the table multiple times. While you will not be offered any single investment option, this is to take into account the different combinations of investment options Australian Retirement Trust may apply to your account based on your age. For more detail in relation to the Australian Retirement Trust (formerly SunSuper for Life) product please refer to the PDS issued by Australian Retirement Trust for this product.
- Investment profiles applied initially may change over time in line with an investor’s age. See the provider’s Product Disclosure Statement and TMD and in particular applicable age groups for more information about how providers determine their investment profiles.
Get to know your risk profile
If you don’t choose a risk profile for your investments then the Association of Superannuation Funds of Australia (ASFA) says you may be allocated to your super fund’s default option. You can change this later to a specific risk profile.
→Read more: How much super should I have at my age?
Dr Martin Fahy, CEO of ASFA, told Canstar your investment choice can have a significant impact on your retirement savings.
“Therefore it’s important to take the time to understand the different investment options available and their potential investment earnings,” he said.
“It’s critical for individuals and couples to be clear on how much risk they feel comfortable taking, the level of investment return they are seeking and also their investment timeframe.
“The answers to these questions will guide you in choosing the right investment option or mix of options for your superannuation savings.”
Some super funds have a risk profile calculator available on their website, such as AMP, Hesta and REI Super, to name a few. Use these as a guide only to help you assess what level of risk you are prepared to take with your investments.
If you are considering a change to your risk profile it may be wise to talk to your super fund provider or financial adviser first, to make sure you are making the right choice that suits your circumstances.
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Canstar may earn a fee for referrals from its website tables and from Promotion or Sponsorship of certain products. Fees payable by product providers for referrals and Sponsorship or Promotion may vary between providers, website position, and revenue model. Sponsorship or Promotion fees may be higher than referral fees.
On our ratings results, comparison tables and some other advertising, we may provide links to third party websites. The primary purpose of these links is to help consumers continue their journey from the ‘research phase’ to the ‘purchasing’ phase. If customers purchase a product after clicking a certain link, Canstar may be paid a commission or fee by the referral partner. Where products are displayed in a comparison table, the display order is not influenced by commercial arrangements and the display sort order is disclosed at the top of the table.
Sponsored or Promoted products are clearly disclosed as such on the website page. They may appear in a number of areas of the website, such as in comparison tables, on hub pages, and in articles. The table position of the Sponsored or Promoted product does not indicate any ranking or rating by Canstar.
Sponsored or Promoted products table
- Sponsored or promoted products that are in a table separate to the comparison tables in this article are displayed from lowest to highest annual cost.
- Performance figures shown for Sponsored or Promoted products reflect net investment performance, i.e. net of investment tax, investment management fees and the applicable administration fees based on an account balance of $50,000. To learn more about performance information, click here.
- Please note that all information about performance returns is historical. Past performance should not be relied upon as an indicator of future performance; unit prices and the value of your investment may fall as well as rise.
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This article was reviewed by our Sub Editor Tom Letts before it was updated, as part of our fact-checking process.
Michael is an award-winning journalist with more than three decades of experience. As a senior finance journalist at Canstar, Michael's written more than 100 articles covering superannuation, savings, wealth, life insurance and home loans. His work's been referenced by a number of other finance publications, including Yahoo Finance and The Motley Fool.
Michael's worked as a reporter and producer for the BBC and ABC, including for Australian Story. He's also worked as a feature writer for The Courier-Mail and as a science and technology editor and commissioning editor at The Conversation.
Michael's professional awards include a Queensland Media Award and a highly commended in the Walkleys. In 2021 he was part of a team that was a finalist in the Australian Museum Eureka Prize for Science Journalism. He holds a Bachelor of Science in mathematics and applied physics (Manchester Metropolitan University) and a Masters of Science in pure mathematics (Liverpool University).
You can connect with Michael on LinkedIn.
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