It’s easy to set and forget your superannuation, but taking the time to review your investment options will set you up for a more comfortable retirement.

When choosing how to invest, you have to consider what level of risk you can accept and how this fits with your stage of life and time until retirement.

Age is an especially important factor.

Why age matters

Superannuation balances will fluctuate over your lifetime as financial markets move up and down and thus affect the returns from interest rates, shares, property and the other investments by your fund.

A younger person might be happy to invest in a higher-risk option for the chance of a better return, knowing there will be time to recover if their super balance drops one year.

Someone approaching retirement has to consider how much volatility they can accept once they are relying on an income from their fund.

Growth vs defensive

Government bonds, international shares, office buildings and freeways. Super funds are among the country’s largest investors and offer their members a choice of investment styles, from very aggressive to low-risk and defensive.

An aggressive approach will aim for high growth by actively investing in assets with above-average returns. Growth assets should give a higher return over the long term. But they carry a higher level of risk, so in some years will drop in value much more than less risky investments. Shares are a growth asset. Even though many companies are steady performers, their value will drop in a stock market crash or downturn.

Defensive assets do not fluctuate as much in value but they pay a lower return. Bank deposits and government bonds are defensive assets. Retirees and people headed into retirement may take this option to preserve their savings, but it’s a tough choice in the current environment of low interest rates.

Some investments, such as property and infrastructure, can be a mix of growth and defensive. They pay regular income such as rent or dividends to investors but the value of these assets can rise and fall, particularly at times of economic turmoil.

Hedging your bets

The balanced option is the most popular choice for Australians in the accumulation phase, or saving for their retirement. It invests in a mix of growth and defensive assets with a higher proportion of growth assets. A balanced fund gives its members exposure to a wide range of investments.

“It’s the Goldilocks’ option,” Hostplus spokesman Paul Watson told The New Daily. Not too risky but not too conservative either.

You don’t have to opt entirely for aggressive, conservative or balanced. These days funds offer a mix. A retiree might prefer a conservative strategy of 70 per cent fixed interest (bonds, cash and bank deposits) and 30 per cent shares, property and growth assets.

How to get started

Most funds have a lot of information available online and many offer a consultation with a financial planner.

Hostplus’ Mr Watson said this is a great way to get started because you and the planner will discuss how you feel about risk, your aims and how to make the most of your super.

This is important when choosing an investment strategy because there is no one-size-fits-all option.

An adviser will point out the drawbacks of a strategy that is high risk or very conservative and is probably more objective than family or friends.

“Financial advice is tailored to suit your needs and puts you in control of your financial future,” Mr Watson said. “They are more of a financial coach than an instructor.”

Advice also sets you on course with a plan that can be revisited to take account of life changes, which is particularly valuable given how long you will be building up your superannuation savings.

Help is available and giving some attention to your super investment options will pay off in the longer term.