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Balanced and growth super options: Which is better for your needs in 2023?

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Both balanced and growth super investment options can offer a variety of benefits, and can be an effective way to grow your retirement savings.

Sponsored by Australian Retirement Trust. As one of Australia's largest super funds, with more than two million members, Australian Retirement Trust can help you achieve the retirement you're looking for.

People's superannuation needs don't remain static throughout their lives. Depending on your overall retirement goals and stage of life, there can be times when a balanced option is preferable, or a growth option may be better suited.

So today, we'll take a look at a number of different life stages, and give an overview of which type of investment option can likely offer you the best benefit.

But first – let's take a look at the key differences between a balanced and a growth investment option.

👋 Hey there! This article is sponsored by Australian Retirement Trust. Accordingly, we'll be using examples from their products throughout. However, it's important to remember that past performance isn't necessarily indicative of future performance. You should always do your own research and choose a super fund that's right for your particular needs. You should also always read the product disclosure statement (PDS) and target market determination (TMD) before signing up for any superannuation product.

Balanced vs growth options

A balanced super option is typically geared at offering stability and growth in tandem.

Year-on-year growth is intended to be fairly stable, while still keeping ahead of inflation rates.

A balanced portfolio will generally be spread across a range of asset classes to minimise risk via greater diversification.

For many super funds, a balanced option is the default and you'll be automatically placed into the balanced option unless you choose otherwise.

By contrast, growth options tend to invest more heavily in higher-risk asset classes in order to grow wealth more rapidly.

A growth portfolio will tend to focus on assets that have the potential for high gains over an extended period, such as shares and property. However, it is generally subject to more volatility in the short term.

This style of super is generally opt-in, due to the higher level of risk involved.

Both balanced and growth investment options offer their own particular strengths – neither is right or wrong.

It's more about looking out for the type of option that's right for you at a particular time in your life.

The same principles for selecting a super fund also apply too, such as a range of investment options, reasonable fees and access to a range of services.

While it's important to remember that past performance doesn't necessarily dictate future performance, it is worth looking for a super fund that has a history of fiscal responsibility and strong historical performance.

As one example, Australian Retirement Trust's Growth option has returned 9.53% p.a. over the past 10 years, as per the June 2023 SuperRatings report. The June 2023 SuperRatings report also indicates that Australian Retirement Trust's Balanced option has outperformed the industry median over the last 20 years.1

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At the start of your career

Growth

During the early stages of your career, a growth-oriented approach to your super tends to be preferable.

You likely haven't hit the peak of your earning potential, but super will still be accruing quietly in the background.

So this period of your life represents an opportunity to grow the balance and benefit from compounding.

If riskier investments don't pay off in the short term, you still have plenty of time to continue earning before retirement and recoup any potential losses.
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Mid-career

Growth

During your mid-career phase, a growth approach is still generally recommended.

You've still got plenty of time to boost your overall balance, and to recover from potential market volatility and short-term market falls.

At the same time, your earning potential is likely higher, and in turn you're receiving a greater super contribution from your employer.

The more you're contributing to your super, the faster your balance will grow thanks to compounded investment returns.

This can also be a good period to look at making additional contributions to your fund or that of your spouse, to help even the balance if necessary.
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Pre-retirement

Both – depending on your personal circumstances

Pre-retirement is the phase when you're beginning to wind down your career. It's usually a period of several years, where you start to put definitive plans for your retirement in place.

You'll need to consider your super balance and determine whether a growth or balanced option is right for this next step.

A growth option can be an effective way to give your retirement resources an extra boost, particularly if you don't feel as though they're matching your retirement goals.

However, if you're on track for your desired retirement amount, it may be worth opting for a more conservative approach with a balanced investment option. Your personal risk tolerance will also influence your decision here - it's important to be confident and comfortable with your choice of investment option.
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During retirement

Balanced – or other alternatives

Certain funds do have dedicated Retirement options, and these can be quite useful for many Australians who are looking to keep their super relatively straightforward.

However, some people also opt to switch to a balanced super option during retirement.

This is because there tends to be a greater focus on generating income and protecting the balance you have, rather than needing to grow the wealth that's already accrued.

You're able to enjoy what you've saved and grown during your career, and funnel the funds towards your retirement goals, while still enjoying decent investment returns on your nest egg.

Managing the future of your super

It's important to remember that everyone is different, and the suggestions above aren't necessarily universal but more of a general guide.

Make sure that you always make informed decisions about your super that are based around your particular needs.

Tools such as the Superannuation Calculator can help provide insight into your projected super balance.

Additionally, it's worth seeking advice before making any changes to your super, particularly if you're closer to retirement.

Funds like Australian Retirement Trust provide access to advisors2, who will be able to provide you with additional information relevant to your unique circumstances.

Learn how you can join Australian Retirement Trust

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Name Last 1 year performance (p.a.) Last 3 year performance (p.a.) Last 5 year performance (p.a.) Last 10 year performance (p.a.) Fees on $50k balance (p.a.)
Australian Retirement Trust - Balanced
Australian Retirement Trust logo
Industry fund
Last 1 year performance (p.a.)
+11.8%
Last 3 year performance (p.a.)
+8.18%
Last 5 year performance (p.a.)
+8.1%
Last 10 year performance (p.a.)
+8.3%
Fees on $50k balance (p.a.)
$507
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