As you start approaching retirement, it’s probably time to review your investment choice

Thinking of retiring sometime in the next few years? Then here’s something you probably ought to take a look at: your super’s investment mix.

Most super funds offer a range of pre-mixed investment options to choose from, ranging from ‘growth’ to ‘conservative’. You can choose an investment option when you open your super account, and generally at any later stage, too. Most super funds also let you choose a mix of different investment options.

During your working years, it’s generally best to ensure your super has a healthy allocation to ‘growth’ assets such as shares and property. Assets like these tend to go up and down in value frequently over shorter time frames of one to two years – the changes in investment value are referred to as volatility. However, over longer time frames, for example seven years or more, they tend to generally produce higher overall returns as a result of growth in the value of the underlying investment.

But as you move through life – and particularly as you start approaching retirement – it becomes an increasingly important time to reassess your super’s investment mix. More specifically, it’s worth reviewing your exposure to defensive assets which generally carry a lower risk of loss. Defensive assets include cash and fixed interest, which typically provide investors with steady returns in the form of income, and usually experience far less volatility over shorter time frames.

This is because with only a few years of salary-earning and regular super guarantee (SG) contributions remaining, you also have fewer years left to smooth out bumpy investment returns.

In short, approaching retirement is a time to stay on top of your super’s investment mix.

Starting to think about retirement? Maybe it’s time to check your investment choice