What risk means for your super

No investment can ever be guaranteed to perform well. The nature of investing means there’s always the potential for your investment to lose value from year to year.

Over the long term, you can think of risk as the chance that the rate of return on your investments might not be enough to provide you with the income you’ll need in retirement.

The appropriate level of risk for you will depend on your age, how long you’re investing for, what other assets you might have outside super and how they are invested, and how comfortable you are with the possibility of losing some of your investment in some years.

Consider how long you’ll need to invest

When choosing your investment plan, the amount of time you want to invest for may impact how much risk you’re willing to take. You don’t need to choose the best performing investment plan. You need the one that best suits your investment personality and your goals.

Risk and return are closely related

Generally speaking, the higher the potential return from an asset over time, the higher the potential risk.

The Association of Superannuation Funds of Australia (ASFA) and the Financial Services Council have created the Standard Risk Measure to help members compare the potential risk of various investment plans.

An example - Readymade plans for GESB Super

Shown below are the Readymade and Mix Your plans for GESB Super, and where they sit on the risk scale compared to each other. The plans are positioned on the chart based on their risk level.

You can see that the Readymade Growth plan is lower risk than Mix Your plan Australian Shares. That’s because the Growth plan also includes assets like Investment Grade Bonds and Cash which bring the risk down. The combination of high risk and low risk assets set the risk level for each Readymade plan.

This chart shows the Readymade and Mix Your plans for GESB Super and where they all sit on the risk scale. The Mix Your plan Australian Shares sits in the ‘very high risk’ band, Mix Your plan International Shares sits in between the ‘very high risk’ and the ‘high risk’ bands. The Mix Your plan Property sits in the middle of the ‘high risk band. The Readymade Growth plan sits in the ‘high risk’ band and Readymade My GESB Super plan sits between the 'high risk' and the ‘medium to high risk’ band. The Readymade Balanced plan sits in the middle of the ‘medium to high risk’ band.The Mix Your plan Fixed Interest sits in the middle of the ‘medium risk’ band. The Readymade Conservative plan sits in the ‘medium risk’ band. Lastly, the Readymade Cash plan and Mix Your plan Cash sits at the low end of the ‘very low risk’ band.This mobile optimised chart shows the Readymade and Mix Your plans for GESB Super and where they all sit on the risk scale. The Mix Your plan Australian Shares sits in the ‘very high risk’ band, Mix Your plan International Shares sits in between the ‘very high risk’ and the ‘high risk’ bands. The Mix Your plan Property sits in the middle of the ‘high risk band. The Readymade Growth plan sits in the ‘high risk’ band and Readymade My GESB Super plan sits between the 'high risk' and the ‘medium to high risk’ band. The Readymade Balanced plan sits in the middle of the ‘medium to high risk’ band.The Mix Your plan Fixed Interest sits in the middle of the ‘medium risk’ band. The Readymade Conservative plan sits in the ‘medium risk’ band. Lastly, the Readymade Cash plan and Mix Your plan Cash sits at the low end of the ‘very low risk’ band.

For more information on investment risk, please refer to the GESB Super Product Information Booklet or Investment choice brochure.

Page last updated 07 March 2019

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