Cash Investment Superannuation

When investing your super money, there are benefits and drawbacks to each type of investment. However, choosing a suitable investment option for your circumstances can have a significant impact on your financial standing during retirement.

What is cash superannuation investment?

Some people choose to put their money in an investment cash account, which can be a good option if you want to protect the value of your investment over the short term. This is because a cash investment aims to guarantee your capital and accumulated earnings are not reduced by losses on investments.

However, the flipside of investing super in cash is that growth is typically minimal, especially in the short term. As with most investments, lower risk usually means lower reward.

With a cash investment, 100 per cent of your super money is deposited in deposit-taking institutions (such as banks) or in a 'capital-guaranteed' life insurance policy. Typically, a cash investment option is investment in a mix of term deposits, bank bills, and/or cash.

A typical cash investment profile looks like:

100 per cent in cash deposits
Very low volatility
No losses over a 20-year span
Low growth

Other types of superannuation investments

Along with cash investment, there are three other main types of investment options:

Growth

A growth investment option generally invests a majority of your money into higher-risk assets such as property and shares.

Typical profile:

80-100 per cent in shares and property
The remainder in cash or fixed interest
High volatility
High growth
4-5 years of losses over a 20-year span

Balanced

A balanced investment option usually has more than half of a fund’s assets in shares and the rest in property, fixed interest and cash.

Typical profile:

70 per cent in shares and property
The remainder in cash or fixed interest
Medium volatility
Mid-high growth
4 years of losses over a 20-year span

Conservative

A conservative investment option is a low-risk investment option with a significant percentage of your money put into cash and fixed interest investments.

Typical profile:

30 per cent in shares and property
The remainder in cash or fixed interest
Low volatility
Low-mid growth
0 years of losses over a 20-year span

How to decide where to invest your super

Factors such as your age, the amount of super you have and your level of financial knowledge should be factored in when deciding where to invest your super.

For example, if you’re younger you might be willing to invest in high-growth options while you can wait out the highs and lows of the market. If you’re moving closer to retirement age and looking for a low-volatility superannuation investment, cash may be the right choice for you.

There is no one-size-fits-all approach to super investment, so it’s worth considering your financial profile and comparing super funds to find an investment mix that works for you.