RSM Australia

Superannuation is not an investment

Wealth Management Insights


“I don’t like super!” – Dave (not his real name)

A common complaint heard by financial advisers but what is it that Dave doesn’t like about superannuation? The misconception is that super “IS” the investment. The truth is that super is only a tax structure that holds investments, in the same way that a company, family trust or a partnership are tax structures and are used to hold investments. In this situation, super is a tax structure used to hold investments for funding Australia’s retirement. What Dave means is that he isn’t happy with the returns from the investments within his superannuation fund or he wants less fluctuations in the value of his investments within his fund.

In years gone by superannuation funds were restrictive, some offering no investment choice at all. Thanks to competition within the industry, almost all super funds now offer their members a broad menu of investments to choose from. Some have less than 10 options, some over 500 options and if you have a Self-Managed Superannuation Fund, you can invest in almost anything you like. But with so many options, how do you decide which one is right for you?

First you need to answer a few questions

  • How long can your money be invested before you need to access it?
  • How much will you need in retirement?
  • How much risk are you willing to take on?
  • Do you need income or growth?
  • How can we get good returns while keeping the risk lower?

Let’s consider some examples.

Dave - A 35 year old male, married with 2 kids.

He’s got a long time to invest his superannuation funds and is happy to take some risk. He wants his super to grow as much as possible before he retires and he only really checks on his super when he gets his annual statement.

  • In this case growth investments in Australian and international shares and property might suite Dave.
  • Dave will benefit from any dividends and rent received from his investments but he’s most excited about the prospect that his investments increase in value.
  • If there is a big market downturn he has time on his side to wait until things improve.
  • By investing his money across a different investments he reduces the risk to his portfolio if one of them loses value.


Mark – A 85 year old retiree, married with adult non dependant kids

Mark is 20 years into his retirement and is most worried about his money not surviving as long as he does! He wants to know that his super will provide some income for him for as long as possible

  • Mark might suit a portfolio of defensive assets such as cash, term deposits and government or corporate bonds
  • They will provide reliable interest rates, although at low levels. Mark doesn’t want to risk losing any money at this stage in his life.
  • Mark doesn’t need to worry about investment market downturns impacting his income levels.
  • The risk to Mark is inflation. That the cost of his groceries, medical bills and gifts for the family rise, effectively reducing the value of the interest he receives. The risk of inflation impacting his buying power increases as he gets older.


Angela – a 65 year old married female.

  • Angela and her husband are going to retire next year. They have almost got enough money to fund their retirement plans so don’t want to take too much risk but they are comfortable having investments in shares.

  • In this case a 50/50 mix of growth assets (Shares and Property) and defensive assets (Cash, term deposits, government bonds) might suit Kate.

  • Angela hope her Shares and Property will increase in value as well as provide dividends and rent but is not reliant on this as she will receive reliable income payments from her term deposits and bonds.

  • Angela is happy knowing that half of her funds are invested in “safe” defensive assets which could be used in an emergency.


So if you find yourself feeling unhappy about your superannuation fund. Look at the way the funds are invested and ask yourself what you want your super fund to do for you. How long can your money remain invested? How much will you need to be able to comfortably retire? How much risk are you willing to take?

This article has been prepared by RSM Financial Services Australia Pty Ltd ABN 22 009 176 354, AFS Licence No. 238282.

As everyone's circumstances are different and this article doesn't take into account your personal situation, it is important that you consider the above in light of your financial situation, needs and objectives, and seek financial advice before implementing a strategy.
View the Financial Services Privacy Statement and Policy and Financial Services Guide