How risky is investing your super in Cash?

21 December 2020

Cash is typically considered to be the lowest risk investment compared to other financial assets. This is because the value of your investment generally doesn’t go down and returns are relatively stable.

How COVID-19 has impacted the performance of Cash

Since the outbreak of the COVID-19 coronavirus, interest rates across the world have fallen significantly as governments and reserve banks have looked to stimulate struggling economies. Australia is no exception – our official cash rate is currently at a record low of 0.1% per annum. This has meant that the returns on our Cash plans have been much lower than in the past.

What does this mean for your super?

If you’ve invested your GESB Super, West State Super or Retirement Income account in our Cash plan, you may wish to review whether your choice is still appropriate for you. You can see what plan you are currently in by logging into Member Online or checking your latest member statement.

When reviewing your investment plan, it could help to think about:

  • Returns vs inflation
    Inflation is an increase in the prices of goods and services that households buy. The annual inflation rate in Australia is currently 0.7%, compared to the Cash plan return of 0.1%. When investment returns are below the inflation rate, your ‘purchasing power’ (the amount you would be able to buy with that money) is reduced.
  • Your investment timeframe
    In the long term, cash is generally the lowest risk asset class but has also generated the lowest return. If you expect to remain invested in your super or Retirement Income account over the long term, it’s possible that other investments could achieve higher returns over the same period.
  • Interest rate changes
    If interest rates continue to fall, Cash plan returns may become even smaller. It’s possible that Cash plan balances could go backwards after taking into account all fees.

Overall, Cash plans are still considered the ‘safest’ investment option as they are least likely to lose money over the short term, before fees. If you’re uncomfortable with the ups and downs of investment markets, then the Cash plan may suit you. However, it’s worth noting that returns could be very low for some time, and this may not suit your investment goals.

Learn more about your investment

It’s important to make an informed decision before changing your investment plan. You can learn more about your investment options and compare the performance of our plans in our Investment and performance section.

You may also wish to seek financial advice from a suitably qualified advisor to help you decide which plan best suits your situation and needs.

Performance information should be used as a guide only, is of a general nature, and does not constitute legal, taxation, or personal financial advice. The performance of your investment plan is not guaranteed, and returns may move up or down depending on market conditions. Past performance should not be relied on as an indication of future performance. In providing this information, we have not considered your personal circumstances including your objectives, financial situation or needs. We are not licensed to provide financial product advice. Before acting or relying on any of the information in this website, you should review your personal circumstances and assess whether the information is appropriate for you. You should read this information in conjunction with other relevant disclosure documents we have prepared and where necessary seek advice specific to your personal circumstances from a qualified financial adviser.

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Page last updated 21 December 2020