Investing your super
Wondering how investing and superannuation work together? Our team explains.
Simply put, gearing involves borrowing money to invest. For example, a geared investment option (or fund) takes an investor’s original investment and borrows additional money with the aim of increasing its size, magnifying its investment exposure and offering the investor broader access to investments. Borrowing can be managed within a fund, often with little to no recourse to investors other than a potential loss of capital if the market value of the fund’s investments should fall.
Geared investments generally comprise higher-risk asset classes like shares and property. These investments can be accessed in a fund offered by an investment provider or via an online trading platform. Colonial First State also has several geared options available within and outside of super that offer access to professionally managed portfolios of shares and property securities.
Note: Please refer to the relevant Product Disclosure Statement (PDS), reference guide and Financial Services Guide before making an investment decision. Fees and costs apply.
For investment options offered outside of super, returns from geared investments can come from capital growth and income that is paid to investors through fund distributions to their account or through distributions that are reinvested back into investment options.
For investment options within super, distributions are retained in super and form part of one’s super balance. This balance fluctuates higher and lower over time depending on the contributions members make to super as well as the performance of the various options their super is invested in.
While there may be benefits to choosing geared investments such as broader market exposure and, therefore, an increased potential for larger financial gains, there are also risks involved – including:
What you choose to invest in will depend largely on your personal circumstances, age, life stage as well as the advice you may receive from a financial adviser. Geared investments in shares and property can have a higher risk-return profile – meaning, in exchange for their short to medium-term risk, geared investments have the potential to deliver higher returns over the long term. For this reason, many investors with decades to retirement may choose geared investments as they will have more time to ride out any impacts from market fluctuations and generate returns. Consider speaking with a financial adviser to help determine whether geared options are right for you.