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your super

Have you ever wondered whether your super is being invested the right way for your age? Are you taking the right amount of risk? Is your super invested in the kinds of investments that will give your account the best chance to grow?

Your super fund gives you a choice of investment options, but if you don’t choose one when you join the fund, your account will be invested in the fund’s default investment option – known as its MySuper option. 

Some super funds provide a ‘lifestage’ investment option as their default MySuper option. A lifestage investment option automatically adjusts the level of risk in your super investments as you get older.  Lifestage investment options are becoming increasingly popular with super fund members. 

The MySuper model

All super funds are required to offer a default investment option known as a MySuper option, for members who don’t actively choose an investment option when they join their super fund. The Government requires a MySuper option to have a range of specific features to ensure it is a quality and cost-effective product for members.   GuildSuper has a ‘lifestage’ investment option as their default MySuper option.

What is a lifestage investment option?

A lifestage investment option automatically adjusts the level of risk in your super investments as you get older. 

The idea behind a lifestage investment option is that young people have many years of investing ahead of them, so they can afford to have their super in investments that may have more risk but that will give them more chance over the long term of earning higher returns. If their account does experience a short period of low or negative returns from higher risk investments, they still have plenty of time on their side to benefit from the gains that those types of investments typically offer.
As you age the theory is that people need to reduce their level of investment in high risk assets, because they have less time to make up for any short-term losses that may come from investing in investment options that carry more risk.  

More shares when you’re younger; more fixed interest and cash when you’re older
In a lifestage option, when you’re younger your super will be invested in a higher proportion of investments with higher risk, such as shares. Then, as you get older the proportion of investments in growth assets will be reduced in stages and your account will be invested in a greater percentage of assets with less risk, such as cash and fixed interest. 

This will help to reduce the chance that your account is affected by short-term market fluctuations just before you retire. 

Lifestage funds are proving popular with super fund members

Lifestage investment options have been offered by some super funds for a few years now, and they are proving to be popular options. This type of approach means that members don’t need to think about adjusting their levels of investments themselves as they get older.

A September 2016 report* shows that overall investments in this asset type has grown by 18% in the past 12 months, which has been a higher rate of growth than that in total superannuation assets, which was 7% over the same period.  

GuildSuper’s lifestage option

Different super funds have slightly different approaches to lifestage investment options. There are slight variations in the allocations to different types of investments at different ages, and different funds reduce risk at different ages or in a different number of stages. 

At GuildSuper, the lifestage investment option is called the MySuper Lifestage Investment Strategy. It’s one of GuildSuper’s range of eight investment options that members can choose from. It’s also the default option for members who don’t choose an investment option when they join the fund. 

GuildSuper’s MySuper Lifestage Investment Strategy invests your account in three different stages, according to your age. 

The Building Lifestage: Up to age 40 your account is invested 100% in ‘growth’ investments, which are predominantly shares.
The Growing Lifestage: From age 40 to 55 your account is invested in 75% growth investments, with the rest in the less risky fixed interest and cash. 
The Consolidating Lifestage: From age 56 onwards your account is invested in 50% growth investments and 50% fixed interest and cash. 

Since the MySuper Lifestage Investment Strategy was launched by GuildSuper in 2013 it has performed** strongly and in line with its objectives. Between 1 October 2013 and 30 September 2016 its average annual returns (net of fees and tax) have been:

Building Lifestage: 8.4% 
Growing Lifestage: 7.0%
Consolidating Lifestage: 5.9%

Want to know more?

To check which investment option your super is invested in or to switch your GuildSuper investment option login to your GuildSuper account.

Lifestage investment options aren’t for everyone. You should speak to a licensed financial adviser to help you understand which investment option is most suitable for your needs and goals.  For more information on your investment options, speak to a financial adviser. GuildSuper members have access to over-the-phone financial advice at no extra cost.

Contact GuildSuper on 1300 361 477.