Ask LH: Should I Switch My Superannuation To Lower-Risk Investments?

Ask LH: Should I Switch My Superannuation To Lower-Risk Investments?

My superannuation plan is currently set to a high-growth plan, and it has performed quite well this year. What are the signs I should look out for to judge if it is a good time to switch to a safer investment plan and safeguard myself from loss? Thanks, Super Juggler

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Dear SJ,

As with any investment decision involving large sums of money, your best bet is to seek professional advice rather than asking some bloke on the internet. But the short answer is that it really all depends on how old and prosperous you are.

Superannuation is a long-term investment, and it is to be expected that there will be rises and falls; even on a so-called “low-risk” plan. A high-growth strategy makes more sense when you’re younger and the date when you’ll actually need your superannuation is far away.

As you near your retirement date, a less aggressive strategy might be a better way to go. Just remember that a bigger potential reward always comes with a bigger potential risk — this generally isn’t advisable if you’re well into your forties, for example.

Instead of trying to predict future market trends, you need to identify what kind of investor you are. There are numerous online financial tools available that will calculate your super ‘risk profile’. This will help to determine whether you should be exposing your funds to higher risk investments or not.

This guide offers some additional tips on how to balance risk when saving and investing. You can also find oodles of information via the Australian Government’s superannuation page. If anyone in the finance industry happens to be reading, feel free to proffer your own two cents in the comments section below.


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  • As as financial planner, my initial thought is that you’ve probably come to the wrong place to ask a question like this. You’ve also provided little information – such as duration until retirement.

    To add to this, timing the market is a very difficult task – something that experienced fund managers still get wrong.

    Your superannuation and investment plan needs careful consideration in conjunction with your complete personal financial situation. If you’re uncertain, you should definitely seek the advice of a financial planner. I’d recommend you try to seek independent advice (that is, a financial planner that is not associated with large institutions, and compelled to sell their products).

    If you’re interested in having a chat, leave your contact details at

    • There are just as many good financial planners backed by large institutions as are self licensed. Storm Financial are the most famous “independent” financial planners most Aussies know of.

  • I was just thinking this morning should I change my medium risk super to a high risk since I’m only 30 and have like 35+ years left until I retire.

  • I’ve got my super split: 50% on high growth and 50% on balanced. I’m thinking about putting it all on high growth though because I’m only 28 so it’ll be a while before I need to retire, and because balanced seems to be doing very poorly for me at the moment. It’s also a good idea to put more in your super than what your employer is currently adding in, even when between jobs. Currently I’m only doing temp work while looking for permanent employment, so when I’m not working I put a minimum amount into my super every week. I don’t miss that money, and because there’s always something going into it there will be a little more in there when I finally do retire than if I didn’t.

  • Rather than choosing age as the criteria for your strategy choose market conditions. Stay in cash or low risk options until the next big downturn, they come around regularly, then start switching over to the higher risk strategy while there are bargains. You’ll know when you are in a downturn because the advisers will be on TV & radio telling everyone else not to switch into cash because they will miss the uptick. This advice never works, as the market always falls further & the losers generally switch to cash at the very bottom.

  • Never base your investment strategy on market conditions. Anyone who could predict what the market was going to do would make themselves filthy rich, instead of grinding off to work every day to work as a financial advisor (or a stock market tipster). The corollary of that is never take advice about how to get rich from someone who’s not rich themselves. There’s a lot of value in the old chestnut about using your age in years to determine what proportion of your assets should be low-risk (and low-yield). So, if you’re 30, have 30% of your assets in cash and bonds and 70% in shares (local and international). If you’re 80, have 80% of yours assets in cash and bonds. It’s an over-simplification, but it’s closer to what’s needed than what most people do.

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