April 14 2022

In a nutshell: The fundamentals of how your super is invested

Your superannuation (super) is money that is put aside, into a super fund, during your working life for you to use when you retire… but what happens to it until then? Well, the trustee of your super fund, invests your super on your behalf, in accoordance with the fund’s investment strategy. The trustee will invest the money across different investment markets using a range of asset classes and investment strategies.

Here’s a simple guide to help you understand the fundamentals of how super is invested.
Nutshell on a light blue background Nutshell on a light blue background

How super is invested?

Super is invested across a range of different types of assets, grouped into classes such as:

  • Shares where you own a share of a company and therefore a share in any profit or loss.
  • Property where you could earn money from rental income and/or rising property values
  • Bonds a bond is a loan, but the money is borrowed from investors to borrowers, such as companies or governments. Income comes from interest paid on the bond.
  • Cash money in a bank account that receives interest.

Risk and return – why do you need a mix of assets?

Different asset classes have different potential for delivering high returns. Whilst we all want high returns in our super, there’s a catch! With higher return potential, we also have to accept higher risks, especially in the short term.

  • Higher risk means there’s a chance to make more money (a higher return), but there’s also a higher risk of losing money. Shares are an example of a higher risk asset, also known as a growth asset.
  • Lower risk means maybe not making as much money (a lower return), but there’s a lower risk of losing money. Cash is an example of a lower risk asset, also known as a defensive asset.
  • Intermediate risk means some assets exhibit characteristics of both growth and defensive assets, like property and infrastructure.

Investment options and risk profiles

When working out your risk profile, it’s important to note that “risky” assets like shares have prices that may fluctuate heavily in the short term. Over the long term (like investing in super), the impact of these short term movements could even out. This means that when we talk about risk for investing in super, we need to look at how long you have before you retire.

This is why younger people often invest in options that have a higher proportion of growth assets, because the short term fluctuations and risk won’t have as much impact on the final balance as they might for a 60 year old, because the balance has more time to recover. As a result, it’s important to work out your level of risk tolerance before investing.


Find out your risk profile

In just 7 minutes our Investment Choice Solution can give Rest members personal advice on which Rest investment option is right for them.

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How does Rest invest your super?

Here at Rest, we have 15 different investment options to choose from. You can choose from Core Strategy, Structured Options and Member Tailored Options. Giving you more control over how your money is invested.

  1. Structured Options – a pre-made approach
    Under this approach, Rest combines the asset classes for you in the right proportion to meet our members’ needs. We create a range of options with different mixes of assets to give you a choice of lower, medium or higher growth options to balance your need for growth with your level of risk tolerance.
  2. Member Tailored Options – a DIY approach
    You can choose to build your own investment portfolio, picking different asset classes based on your individual risk and return objectives. At Rest, the Member-tailored Options allow you to choose from options built around each asset class, as well as allocating money to the Structured Options if you like. That way, you could do it all yourself or if you wanted more property in your super portfolio, you could choose the Core Strategy and allocate some money to the Property option as an example.

What’s right for you

To support you in making this decision, here are five things to consider:

  1. How comfortable you are with risk? Are you keen to ride the waves of market volatility, or do you feel more comfortable with a ‘slow and steady’ approach?
  1. How close to retirement you are? As mentioned, the further away you are from retirement, the higher the risk you may be able to take, as you could weather any short-term market fluctuations. If retirement is around the corner, you might want to be more conservative to reduce the risk of your balance going down just before you stop working.
  1. Your retirement saving goals Knowing whether your super balance is on track for the future, or in need of a boost, may influence how much risk you’re willing to take.
  1. Your values. You may be able to choose investment options that are more tailored to your values, like sustainability, or supporting Australian-owned businesses.
  1. How hands-on you want to be when managing your super. Do you want to take control and actively explore different investment mixes, or make a choice and check in on your progress?


There is always risk involved in investing because the value of assets you are invested in can go up or down over time, meaning your super balance might increase or decrease. But try not to panic during any dips as markets and investments do recover over the longer term. Keep your eye on your long-term goals, and if you need any advice, we’re always here to help.

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