risk and your age


Having a super account means you’re an investor, and that involves taking on investment risk.

Investing in super carries various levels of risk. Super funds like HESTA offer a range of different investment options – and you’re free to choose where you’d like to invest your money. You’re also free to make no choice at all, which means you’ll be invested in the default investment option. At HESTA, that’s the HESTA MySuper Balanced Growth option.

If you do decide to choose where your super is invested, making that decision involves understanding what level of investment risk might suit you.


What’s investment risk?

Investment risk is the probability of negative returns, or losses. So the greater return you want, the more risk you'll usually have to accept. If you're investing for the long-term it’s likely that you can afford to take more risk as your money has more time to recover from falls in the markets. If you're investing over the short-term it's generally considered wise not to take much investment risk.

Investments are divided into two different types – growth or defensive. Defensive investments are things like cash, bonds and term deposits which tend to have very little risk, but also, generally lower returns. These types of investments might suit short-term investors, because they tend to fluctuate less. At HESTA, we see members who prefer to invest in these types of assets as more cautious.

Growth investments are riskier, and invest in things like shares, private equity and infrastructure. You know that saying, “you’ve got to risk it for the biscuit?” This essentially means that to get the reward, you need to take the risk. By investing in growth assets, you might see more ups and downs in your super balance in the short term, but you might also see it grow much higher in the long term. HESTA members who choose to invest in these types of assets are what we’d call more ambitious.


When to embrace risk

Research shows that a person’s comfort level when it comes to taking on financial risk – that is, the possibility of losing money, has been proven to grow with age and income level.* It’s also been shown women may find investment risk more difficult to take on than men.^ Yet, according to ASIC, taking investment risk in higher growth assets is more beneficial when you have time on your side.


*Gallery, Newtown & Palm 2011, Clark-Murphy & Gerrans 2004.

^ Wilkins 2014, Lemaster & Strough 2014.

“A higher growth option will have higher risk and experience more volatile returns over the short term. But it will usually achieve higher returns over the long term. A conservative option will offer lower risk but lower returns over the long term.”

ASIC 2020


Why your age matters

Age is one of the most powerful weapons you have when it comes to super investment decision-making. Let’s look at two very different member scenarios.

HESTA member Mariah




Mariah is 25, a HESTA member, and has been working full time for a year. She is invested in the default HESTA MySuper option – Balanced Growth. Mariah has an investment time horizon of 40+ years before she retires. This means that by the time she does, COVID-19 will likely be just a blip on her investment timeline. If Mariah wanted to embrace more risk while she’s younger, she could choose to invest in a higher growth option such as HESTA High Growth, Sustainable Growth or Indexed Balanced Growth.

This example is provided for illustration purposes only.

HESTA member Andrew


HESTA member Andrew is 64 and is getting ready to retire. He is also invested in the Balanced Growth default option and is now able to access his super. However, due to the impact of COVID-19, his balance has decreased because his super is invested in 75% growth assets – and these have seen a lot of volatility during the coronavirus pandemic. If Andrew had decreased his level of investment risk with his age and chosen options like Conservative, Diversified Bonds and Cash & Term deposits, the COVID crisis might have had less of an impact on his super balance right at the time when he’s accessing it.

This example is provided for illustration purposes only.


What level of risk is right for you?

We all know that super is a very loooooong term investment. Think about it: you likely opened up your first super account when you started your very first job. Unless you need to access your super for hardship or compassionate reasons, you can’t touch what’s in it until you reach your preservation age!

Deciding what level of risk is right for you is a very personal decision. That's why we've developed the risk profiler to help you figure out your risk tolerance.


Try the risk profiler



if you need more help, we're here for you

Make a time to speak to one of our friendly super advisers - it's available at no extra cost and all part of the service for HESTA members.

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