Benefits of investing in superannuation

Super can often be a forgotten and unloved asset, especially given that it usually can’t be accessed until retirement. However, periodically reviewing (e.g. every 6-12 months) your super and making proactive investment decisions can be the difference between a comfortable retirement balance and something more modest.

Here is what you need to know about why investing in superannuation can be beneficial:

Super is a long-term investment

If you start working in your 20s and retire in your 60s, that’s several decades of regular contributions that your employer will have made to your super account. That means you’re giving your retirement savings the best chance to grow over time and ride out any short-term market fluctuations.

Tax savings on superannuation investment returns

Investment returns inside super are generally taxed at a maximum rate of 15%. Outside of super, if you hold investments in your own name, investment returns are taxed at your income tax rate plus Medicare levy (which can be a lot higher than 15%).

You can reduce your taxable income by making extra contributions to your super via a salary sacrifice arrangement with your employer, or making a personal contribution and claiming a tax deduction for it in your tax return. Remember, contribution caps apply so keep track of your contributions as you may have to pay extra tax if you exceed these limits.

Funds are managed by investment professionals

As opposed to direct investment in shares which can require time and effort to manage, superannuation investments are managed by investment professionals who understand how markets work, and look for investment opportunities to increase your returns. The fund may also have access to investments which are unavailable to you through direct investments.

Superannuation investment options

Did you know as a super fund member, you can choose how your money is invested? 

This choice can affect how your balance grows. If you don’t want to make your own decision, your super fund can make a choice for you (called a ‘default’ or ‘automatic’ investment).

Most super funds offer a range of superannuation investment options that means you can choose to invest your super according to your goals, values and needs. This is where understanding your risk appetite and investment timeframe is important.

The most common investment options include:

  1. Diversified options provide members with a mix of investments (known as ‘asset classes’) such as shares, fixed interest, property and cash. These options are usually named ‘Growth’, ‘Balanced’ and ‘Conservative’ and each will have different objectives, asset allocations, risk profiles and recommended investment timeframes.
  2. Lifestage options – provide members with a more automated approach. The investment strategy selected will be based on your age, and will be adjusted as you get older, usually from a focused growth option to a more conservative option.
  3. Single-sector options offer members a more selective approach to investing in specific asset classes like shares or property.
  4. Sustainable or responsible investing options these options are managed with an additional screening process around environment, social and governance (ESG) considerations. For example, the investments may exclude exposure to companies such as tobacco and weapon manufacturing.

Deeper dive into superannuation asset classes

The risk level of superannuation investment options depends on which asset classes they hold.

For example, an option that holds mainly shares and property would be high risk in relation to a cash option. But with higher risk often comes greater potential returns – it is a balancing act.

To make things easier for members, super funds give investment options a risk rating (a number between 1 and 7), which is an estimate of how often negative returns may occur over a 20-year period for that option. There are never any guaranteed outcomes as investment markets can be unpredictable. That’s why it’s important to determine where you’re at in your investing journey and what level of risk you’re comfortable with.

Here are the different asset classes you might come across when investing in super:

  1. Cash (low risk): these investments work much like having a bank account. They include savings accounts, money market funds and treasury bills. Returns are generally stable and predictable. 
  2. Fixed Interest (low-medium risk): are investments usually issued by companies or governments to raise money (also known as ‘bonds’). The issuer agrees to make regular interest payments over the life of the bond, and to refund the full principal once the bond expires. The risk of a bond can vary based on who the issuer is and their credit rating.
  3. Property & infrastructure (medium-high risk): when you invest in property through super, this generally means investing in property funds or real estate investment trusts (REITs). The funds may buy commercial properties, such as storefronts or office spaces, and investor returns are generated through increases in property values and capital gains. Infrastructure investments refer to large-scale physical assets – such as roads, train lines, power stations, communications towers and public housing.
  4. Shares (high risk): represent a part ownership in publicly traded companies. Investor returns are generated from capital gains linked to the company’s share price, as well as dividends paid to shareholders.
  5. Alternative (varied risk): investments those that don’t fall into one of the other categories. This may include hedge funds, private equity, private debt, collectibles, commodities and currencies. The expected risk and potential return vary for each type of investment.

Tracking superannuation investment performance

Since super is a long-term investment, you shouldn’t get overly stressed about short-term fluctuations. However, it is important to review your account statements to track the growth of your super balance and see how your investment options are performing.

When comparing superannuation funds, ensure you're comparing similar investment options with the same risk profile. Most super funds provide detailed performance data within their online member portals. View the performance of Essential Super investment options.

The YourSuper comparison tool, provided by the ATO, allows you to compare different super funds based on fees and performance, including historical returns and risk profiles. You can also see how your current fund stacks up against others.

Creating your own superannuation investment strategy

Making informed superannuation investment choices early in your working life can make a significant difference to your returns.

If you’re someone who doesn’t take much of an interest in how super is managed, there is always the default (or Lifestage option), with the advantage being that risk is automatically managed.

If you’re engaged with your super and interested in the end outcomes, it is important to get a good sense of your:

  • Appetite for risk
  • Investment time horizon
  • Financial goals
  • Personal values

Discover Essential Super’s investment options:


How to switch investment options in Essential Super

Things you should know

This is general advice only. It does not take your personal objectives, financial or taxation situation or other needs into account. Before acting, you should consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.

Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (referred to as Colonial First State, CFS, ‘we’, ‘us’ or ‘our’) is the Trustee of Essential Super ABN 56 601 925 435 and the issuer of interests in Essential Super. Essential Super is distributed by the Commonwealth Bank of Australia ABN 48 123 123 124, AFSL 234945 (the Bank). The CFS Group consists of Superannuation and Investments HoldCo Pty Limited ABN 64 644 660 882 (HoldCo) and its subsidiaries, which includes CFS. The Bank holds an interest in the CFS Group through its significant minority interest in HoldCo.

This information is issued by CFS and may include general financial product advice but does not consider your individual objectives, financial situation, needs or tax circumstances, and so you should consider the appropriateness of the advice having regard to your circumstances before acting on it. The Target Market Determination (TMD) for Essential Super can be found at and includes a description of who the financial product is appropriate for and any conditions on how the product can be distributed to customers. You should read the Product Disclosure Statement (PDS) and the Reference Guides for Essential Super carefully and consider whether the information is appropriate for you before making any decision regarding this product. Download the PDS and Reference Guides at or call us on 13 4074 for a copy. 

None of the Bank, HoldCo, CFS, nor any of their respective subsidiaries guarantee the performance of Essential Super or the repayment of capital by Essential Super. An investment in this product is subject to risk, loss of income and capital invested. An investment in Essential Super is via a superannuation trust and is therefore not an investment in, deposit with or other liability of the Bank or its subsidiaries. 

The insurance provider is AIA Australia Limited ABN 79 004 837 861, AFSL 230043 (AIA Australia). AIA Australia is not part of the Commonwealth Bank Group or CFS. Insurance cover is provided to eligible members of Essential Super under policies issued to CFS.

Any information provided by CBA may include general financial product advice but does not consider your individual objectives, financial situation, needs or tax circumstances, and so you should consider the appropriateness of the advice having regard to your circumstances before acting on it.  You should read the PDS and the Reference Guides for Essential Super carefully and consider whether the information is appropriate for you before making any decision regarding this product.

Tax considerations are general and based on present tax laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. AIL is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or adviser if you intend to rely on this information to satisfy the liabilities or obligations, or claim entitlements that arise under a tax law.