If you are looking forward to have a secure retirement or a stable income for life, a self-managed super fund (SMSF) is the answer. SMSF is developed with a sole purpose, however the tendency is that with super, you can easily set and forget. This should not be the case. There are wide range of investment options you can make that can have a major impact on how your super fund performs.
Investing your super funds
You can invest your super funds in a variety of options to grow your nest egg over your working life. However, when selecting an investment for your super, you need to ensure that the investment meets your SMSF objectives. And that is to provide sufficient returns on your retirement.
Types of investment options
Growth
This investment types is around 85% shares or property while the 15% is in fixed rate or in cash. It aims higher average returns in the long run but has higher risks compared to other investment options. This means that growth can also mean higher losses on bad years. You may also invest in a “high growth” option with 100% in property and shares.
Balanced
This investment is 70% share or property and the rest is in fixed interest and cash. It can provide you with reasonable returns but less than the growth funds. Since a balanced fund has a lower risk, it also reduces your losses in bad years. Another good factor with this type of investment is that the losses are less frequent to occur in a balanced fund compared to the growth fund. You may also invest in a “moderate” fund with 50% in shares or property.
Conservative
The conservative fund is 30% shares or property and the majority is fixed interest rate and cash. This fund aims to reduce risks of loss and thus accepts lower returns in the long term. This type of investment has less chance of having a bad year than in growth and balance fund.
Cash
This fund is purely 100% deposits in one of Australia’s deposit-taking institutions or in “capital guaranteed” life insurance policy. This investment aims to guarantee your capital and accumulated earnings. The best thing about the cash investment is that it cannot be reduced by losses on investments. This means no bad years for you.
You see, there are many options you can choose to grow your SMSF and one of them is to buy investment property. To know which type of investment is the right one for you, talk to the professionals and start building a secure retirement today!