Control WITHOUT Confusion.  Deciding where your super money goes.

Probably the most important part of your application form is deciding where your money goes. To get the most out of your super you have to know how to invest your funds using TIC Super’s Investor Choice option.

As a guideline, we have provided the following suggestions:

As you can see, asset allocation involves dividing up your money among different asset categories, such as shares, property and cash. The decision of which mix of assets works best for you is a very personal one that largely depends on your time horizon and your attitude to investment risks.

Time Horizon - Your time horizon is the expected time (months, years, or decades) you will be investing. An investor with a longer time horizon may feel more comfortable taking on a riskier, or more volatile, investment because they can wait out the ups and downs of investment markets in the hope of earning a greater return over time. By contrast, an investor saving up this year to buy a house next year would likely take on less risk because they have a shorter time horizon. Because the law restricts you from accessing your super before you’re 55 or 60, your time horizon for super investments is strongly linked to your age: that is, if you’re 25 you’ve got at least 30-35 years of your money remaining in super and if you are 59 you could access your super in just one year. Generally therefore, the younger you are the more aggressively you might invest in super.

Risk Tolerance - Risk tolerance is your ability to make a trade-off between the risk of losing money in an investment and the chance of getting greater potential investment returns. Someone with a high-risk tolerance, is more likely to be willing to risk losing money in order to have a chance to get higher investment returns. By contrast, someone with a low-risk tolerance tends to favor investments that will preserve their investment capital.

You can see in the table above, there is not much difference in our preferred allocations across the different age ranges. It is common in other super funds for there to be wide differences in age-based portfolios, but the choice of assets available through TIC Super means you don’t need to make massive changes to have the desired effect. Think of it as the difference between steering your car with small, smooth motions of the steering wheel compared to yanking it from side to side every time you think you need to change direction.

Also, a properly designed portfolio should be able to serve you without too much change across all your investing years; after all, if you picked a good investment property when you were 25 and it continued to grow in value and rent, why would you suddenly decide that just because you’re now 55 it is no longer suitable?

If you want to look at the information on the different asset classes, and where they fit in an investment portfolio, download the TIC Super Product Disclosure Statement and take a look at pages 29 & 30. There is also more information on risks of investing from pages 30 through to 33.

We hope that helps. Of course, if you’ve got further questions take a read through the Product Disclosure Statement or call our staff on the TIC Super Enquiry Line (1300 960 090) or drop us a line at glen@ticsuper.com.au