How to Choose Superannuation Investment Options

In this article:

Explained: Choosing investment options inside Super is scary, confusing and important all in one.

Indeed, choosing the wrong versus right Super investment option could make or break your retirement strategy.

Fortunately, in this video Owen explains the things to look for when you’re choosing investment options (also called Superannuation investment strategies), including:

Getting insurance inside Super

Changing Super funds is easy as picking a Netflix title these days. However, there are many reasons that can be deadly for your wealth.

One of the most important reasons changing Super funds can be risky is that you may lose insurance coverage. Many people, like us, hold insurance through a Super fund. A Super fund can hold these three types of insurance for you (meaning the costs of insurance are paid by your Super fund — not your household budget):

  • Income protection insurance – provides you with a set amount of income when you injure yourself or get sick and cannot work
  • Life/death insurance – pays out a lump sum to your Super fund if you die (then the Super fund pays that to whoever you nominate)
  • TPD or Total & Permanent Disability insurance – this insurance is paid out to you when you are totally and permanently unable to work.

These insurances are covered in our Insurance in Super tutorial.

When you change Super fund, there’s a chance the new Super fund’s insurer will not cover you for pre-existing conditions, or if you increase your insurance level (“restricted cover”). Make sure you read the PDS and Insurance Guide before swapping Super funds.

You might even consider having one Super fund for its better insurance and another ‘primary Super fund’ for investing most of your retirement savings. Just check fees and minimum balances.

Superannuation Costs & Fees Explained

When you choose a new investment option or strategy to use for your Super chances are it will come with a different fee. For example, a “growth” investment option might cost 0.5% and a “defensive” investment option could cost 0.4%.

It’s the same fund but depending on the option you choose you could be changed a higher or lower fee.

Rask Tip: Paying 1% more in Super fees could mean 20% less at retirement (e.g. in 30 years). It should take a few hours — at most! — to choose a Super investment strategy/options and keep costs low. 

We explain Superannuation fees and costs (and provide an example) in our tutorial.

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Owen Raszkiewicz

Owen Raszkiewicz

Owen is the Founder of Rask Australia, Lead Investment Analyst for Rask Invest and head educator at Rask Education. Prior to founding Rask, Owen was an investment analyst at the highly regarded managed funds research business Zenith Investment Partners and a Writer/Analyst for The Motley Fool Australia. Owen’s formal qualifications include a Master of Applied Finance and Master of Financial Planning from Kaplan Professional, Bachelor of Technology (Information Systems) from Swinburne University of Technology, Advanced Diploma of Financial Services (Financial Planning) and Diploma of Mortgage Broking Management. He's also completed level 1 of the Chartered Financial Analyst (CFA) program.

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