How investments work

Whether you’re an experienced investor or just starting to learn more about how investments work, here are some tips to help you make good investment decisions:

  • Set your investment goals
  • Understand how risk and return work
  • Know the investment before you invest in it
  • Keep track of your investment

These tips apply to your super, but you might find these tips helpful when making any decisions on any kind of investment.

Set your investment goals

You can’t control how your investments will perform but you can take control of your investments by creating a plan. Start by thinking about what you want to achieve with your investments and set a timeframe for each goal.

In terms of your retirement goals, think about whether you need to access your investments before you retire. If you do, then adding extra money to your super may not be your best option. If you don’t need to access your investments until you retire, you’ll find there are tax benefits of investing in super.

The MoneySmart website provides information to find out how to create a realistic plan that meets your needs.

Visit the MoneySmart website

Understand how risk and return work

Risk and return are closely related when it comes to investing. Generally speaking, the higher the potential return from an asset over time, the higher the potential risk.

To be a successful investor, you need to know the types of risks that can affect your investments.

You should also consider how much risk you’re comfortable with when you're shaping an investment plan.

Investing in a range of different assets is called diversification

You can manage risk by spreading your money between different asset classes such as Cash, Fixed Interest, Property and Shares.

For example, when share markets are performing poorly, Cash and Fixed Interest historically do better than Property and Shares. The aim of holding a mix of assets is to achieve a better balance between risk and return compared to investing in a single asset class.

For more information, see investment mix explained.

Know the investment before you invest

We’re here to help you learn as much as you can about your super and understand how your money is invested. You could start by looking at the investment plan options pages to understand what assets are included in your investment plan:

Once you know what is included in your plan, you can find out more about what these asset classes mean. We also have information on how each of the asset classes is invested.

You may also be interested in learning about how we consider and approach environmental, social and governance (ESG) issues when investing on behalf of our members.

Read the Product Information Booklet

It’s always worth reading the Product Information Booklet (PIB) or Product Disclosure Statement (PDS) for each investment product to make sure you understand it's key features, fees, commissions, benefits and risks. Ask the product provider or a financial adviser if you have questions.

Download your Product Information Booklet

Keep track of your investment

Even with careful planning, economic conditions and company profits change from year to year, so it's important to keep track of your investments.

Be patient

Market and economic conditions can change rapidly so it’s important to stay calm and be patient. Some investors try to time the market and fail. If your investment is for the longer term, it will always be subject to some short-term ups and downs.

Investing in volatile markets

More information

Need help

  • Call us on 13 43 72
Page last updated 12 June 2019