At AustSafe Super we know that investing doesn't necessarily have to be a shaggy dog story. With the right information you can make educated decisions about your investments and this section of our website aims to help you do just that.

Before you start investing

Before you start making investment decisions there are a few questions you should ask yourself:

• What is my attitude to risk and return?
• What stage in my life am I at and how long do I intend to invest for?
• How do I feel about investing in different types of investments?
• How prepared am I to accept variable returns in the short term for potential higher returns in the long term?
• What investments do I already have and what future financial plans are in place?
• What are my overall financial circumstances?

With these answers in mind, read on to learn the basics of investing. Remember, even the smallest step in the right direction will have you wagging your tail like a dog.

Types of investments

Investments used to gain a return are often called "Assets". Assets can be divided into categories known as Asset Classes, which include; Cash, Fixed Interest, Infrastructure, Property, Equities and Hedge Funds.

To help identify the nature or behaviour of particular asset classes, they can be grouped together as Defensive, Growth or Alternative Assets.

Growth Assets

Growth assets include investments which generally provide higher returns over the longer term, while tending to fluctuate more in the short term. Growth assets typically have a higher proportion of returns from capital growth with higher risk (proportionate to their returns).

Defensive Assets

Defensive assets are those which deliver moderate or lower returns over the longer term, while having more stability in the short term. Defensive assets have a lower risk (proportionate to their returns) and a high proportion of their returns come from income flow.

Alternative Assets

Alternative assets include investments in products other than traditional asset classes such as Equities, Cash and Fixed Interest, and are often managed via different methodologies to that of the traditional asset classes. Like traditional asset classes, alternative assets can also be grouped as both growth and defensive assets and may include investments such as Infrastructure, Hedge Funds and Private Equity. Investment returns for alternative assets may come from a number of sources including capital growth and income flow.

Download more information about assets classes here.

Diversification

Diversification means spreading your investments across a range of asset classes or types of investments so you are exposed to different market classes. AustSafe Super makes it easy to diversify your investments. Before making your Member Investment Choice, you should consider the risks associated with investing in superannuation and those of diversification.

Risk and return

Risk and return are related. This means the lower the risk, usually the lower the return (and the lower the likelihood of a negative return) and the higher the risk, the greater the likelihood of higher returns (and the higher the likelihood of a negative return).

Asset classes can be roughly plotted on a graph. It is the mix of these asset classes in your investment portfolio 
Member Investment Choice that creates the risk/return expectation for that portfolio. AustSafe Super's Pooled investment options contain a mix of asset classes to achieve different risk/return objectives. You can find more information about the risks of AustSafe Super's individual asset classes in the Member Investment Choice section of our website.

General performance of asset classes

Investment markets are unpredictable. Past performance shows that over shorter periods it is almost impossible to predict which asset class will earn the highest rate of return. However, over the longer-term, growth assets (like equities) have on average, earned a higher return than defensive assets (like cash and fixed interest).

Returns for growth assets are more unpredictable than the returns for defensive assets (as outlined in the graph below). International and Australian equities have provided the highest returns over the longer-term (as outlined in the graph below). A person who invested in equities would have received higher returns than a person who invested all their money in cash or fixed interest.

While past performance provides no indication of future performance, it does provide an insight into how each asset class may perform.

So, while it is true that investment markets are difficult to predict, different asset classes do not all move in the same direction at the same time, or at the same speed. The reason for this is that asset classes react differently to influences such as growth, inflation, interest rates and exchange rates. A change which is good for one asset class may not be so good for another asset class. Concentrating your investments in a single asset class increases risks, while diversifying your investments aims to reduce these risks.

You can find more information about the performance of AustSafe Super's asset class investment options and pooled investment options in the Member Investment Choice section of our website.