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What to consider when choosing an investment option?

Investments aim for returns with varying levels of risk based on the asset class. Choose suitable investments to minimize loss.

Financial Advice, Lifestyle
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When it comes to investing your money through your super fund, it’s important to choose the right investment options that align with your personal circumstances and financial objectives.

To do this, you’ll need to consider several key questions:

  • Do you understand how asset classes work?
  • What is your level of comfort with investment risk?
  • What type of returns are you looking for?
  • What is your investment timeframe?
 

All investments are designed to make a return, but they come with varying levels of risk depending on the asset class. While there’s potential for making money, there’s also a chance that you could lose it. That’s why it’s crucial to evaluate your level of investment risk, which is essentially the possibility that your investments don’t meet your financial objectives. In general, the higher the potential investment return, the higher the investment risk, and the longer the suggested investment timeframe.

Your investment timeframe will largely depend on your age and financial goals. If you’re young and have a long-term investment horizon, you may be comfortable taking on more risk through higher-risk options like shares, which can weather short-term fluctuations. However, if you’re nearing retirement and need to access your money sooner, it may be more appropriate to invest in lower-risk options like fixed interest to protect your capital.

With so many investment options available, it can be overwhelming to decide which ones are right for you. While your super fund can explain the different investment options available to you, speaking with a financial adviser can help you choose options that may suit your personal circumstances and financial objectives. A financial adviser can also provide investment advice and strategies for retirement planning, which can help you make informed investment decisions that align with your goals.

Selecting the right investment options for your super fund requires careful consideration of your investment timeframe, risk tolerance, financial objectives, and personal circumstances. By understanding how different asset classes work and seeking professional advice when needed, you can make informed investment decisions that set you up for financial success.

 

Source: CFS

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