Shares versus superannuation: Where should you invest?

Unsure whether to use your extra income to contribute to your super or buy shares? Here are some benefits of each.

If you’ve got some money that you’d like to invest, you could find yourself wondering which is the better option: buying shares or topping up your superannuation. Both are a form of investing, and each option comes with its own advantages and disadvantages. Read on to learn more about the differences between these investment options in this guide.

What are shares?

When you purchase shares, you get part ownership (or a share) of a particular company. You can’t buy shares in any company, only those which are publicly listed on the Australian Stock Exchange (ASX).
As with any company, it can perform well or poorly. When a company performs strongly, the price of its shares rise. This is good news for investors as the value of their shares has increased. This is referred to as capital growth, and means that you can sell the shares for more than what you initially paid for them. However, if the company performs poorly, the value of the shares decreases.

What are dividends?

In addition to the value of the shares increasing, many companies will also pay shareholders a dividend, which is basically a share of the company’s profits. The amount you receive as a dividend payment will be directly related to how many shares in the company you hold. If you invest in enough shares, you could create a second income stream out of the dividend payments alone.

Keep in mind that a company isn’t required to pay shareholders a dividend when it’s doing well. A company may decide to re-invest that money back into the company to help it grow and thrive. This is also good for shareholders since it means the value of the company will increase over the long term as will its shares.

What is superannuation?

Superannuation is a way to save for your retirement and is basically one big investment portfolio. Your employer is required by law to pay a portion of your earnings into your designated super fund, which is managed on your behalf. The money in your superannuation is invested into various assets, including shares, with the main aim of growing your balance over time.

As the main purpose of superannuation is to fund your retirement and to be a substitute for the Age Pension, you typically cannot access it until you’re retired. There are some rare situations where you’re able to access your super early, which you can read more about here.

What to consider when choosing between shares and superannuation

There are a few factors to consider when deciding to invest in shares or contribute to your super.

Economic conditions

Shares and super are both dependent on wider economic conditions. Both are investments so the performance returns can change depending on the economy. That’s why when you have shares and/or super, it’s best to regularly check the performance of the company and the super fund so you know your money isn’t losing value.

Super is a long-term investment, so short-term declines and dips in the economy won’t affect it too much unless the economy continues to decline. The long-term nature of super means it is well placed to ride out any waves and dips in the market.

However for some shares, if it’s a short- to medium-term investment, the direct impact of market conditions can seriously affect the value of your shares. This is especially true in a volatile market or during times of economic or political uncertainty. However, if you plan to hold your shares for the long term (for example 7-10 years or more), your investment will be better placed to overcome small dips in the market.


Diversification is an important strategy for an investor to minimise risk. Superannuation is typically more diversified since it invests in a whole range of assets from cash and shares to property and government bonds.

However, you can still achieve a relatively diversified portfolio when investing in shares by making sure your investments are in different industries. For example, having a mix of Australian shares, international shares, shares in technology companies, shares in blue chip companies and even shares in companies that invest in shares (these are called Listed Investment Companies) and so on. That way, if the entire technology industry suffers, you don’t have all your shares in that sector alone.

Your risk tolerance

Typically, the more risk you’re willing to take, the greater reward you get if all goes well. If you invest in shares, there is quite a lot of risk involved, especially if you are new to the stock exchange. Unless you have a financial adviser helping you through the process, you’ll have to manage most of your shares yourself, which can be tricky when you’re first starting out.

With super, your money is managed by the fund and it decides how to invest your money. There can be less risk involved with super since it’s managed by a fund, but you still have the option of choosing a more risky option if you want it.

However, while shares may be more risky, there’s also the potential to earn more money in the form of dividends or capital growth in the short term, which could be appealing. It depends what your strategy is, and what you want to achieve from your investment.

Your investing expertise

Your level of investment expertise may affect your decision as to where to invest your extra money. Superannuation is managed for you on your behalf, so if you have no investment experience and aren’t interested in learning, it could be best to contribute to your super instead of buying shares.

However, if you do have some investment experience or have done some research, shares could be a great option. Just be prepared to stay engaged. This means monitoring the share price, keeping up-to-date with the company and staying on top of broader market and economic conditions.

Your age matters

Age is a big factor when determining if you should go for shares or put your money into your super. Anyone who owns shares will receive their returns without restriction. You may receive dividends or sell your shares for a higher price whenever you choose. Theoretically, shares are a long-term investment if you want to make a decent return, so investing in shares when you’re about to retire may not be a good idea.

On the super side of things, you have to wait until you retire before you start accessing your benefits. So if you’re young and want to access your returns immediately or sooner rather than later, investing in shares may be a better idea. However, if you prefer to save for a more comfortable retirement, putting your money into super will be a better way to guarantee safer returns.

Investing in shares over your super: pros and cons


  • Individual ownership of the shares.
  • You get dividend payments.
  • You get capital growth.
  • You have complete control over your investment decisions.
  • You can sell at any time.


  • Shares are less diversified than superannuation.
  • They are generally a higher risk.
  • They require a greater level of engagement and more expertise.

Compare Share Trading Accounts

Updated December 10th, 2018
Name Product Monthly fee Standard brokerage fee for ASX shares Margin trading - Online IPOs / Floats International shares
$8 or 0.1%
Low brokerage fees on Australian and international shares. Earn 25 Qantas Points when you trade Australian shares, 50 Qantas Points when you trade international shares (T&C's apply).
Trade ASX-listed shares for a flat fee of $9.50, regardless of the trade size. New customers receive free access to Community Insights with SelfWealth Premium for the first 90 days. Follow other investors and benchmark your portfolio performance.
$6.99 or 0.1%
Access over 19,000 Australian and global shares.
$15 for trades up to $10,000
Enjoy tiered brokerage fees, Bell Potter research and eligible market-to-limit orders placed onto the ASX in under a second. For a limited time, get a custom deal based on your trading preferences when you switch to Bell Direct.

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Investing in your super over shares: pros and cons


  • Your super is managed for you.
  • It’s a more diversified portfolio than shares alone.
  • There is less risk involved.
  • You benefit from long-term growth.
  • Tax concessions are available.


  • You cannot access the funds until you’re retired.
  • You have little to no control over where your money is invested.
  • There are limits as to how much you can contribute to your super.

Compare Super Funds

Name Product Past 1 Year Performance Past 3 Year Performance Past 5 Year Performance Calculated fees on $50,000 Insurance Included
Death, TPD
Earn a Retirement Bonus of up to $4,800 when you open a new Income account. T&Cs apply.
New fund
New fund
Death, TPD
Earn Velocity Frequent Flyer Points for making contributions to your super. T&Cs apply.
Death, TPD, Income Protection
Choose between 14 different investment options, including a socially responsible option.
Death, TPD, Income Protection
Enjoy discounted rates on banking products with ME Bank and health cover with GMHBA health insurance.
Death, TPD, Income Protection
Socially responsible and ethical investment options available.
Death, TPD
Pay no entry, exit or switching fees and enjoy a range of different investment options with QSuper.
Death, TPD, Income Protection
Get access to one-on-one professional advice at no additional cost.
Death, TPD, Income Protection
Choose investment options that align with your personal values.
Death, TPD
Access offers, deals and discounts through the BT Super Benefits Now program.
Death, TPD, Income Protection
Enjoy discounted health insurance with HCF.
Death, TPD
Get fee-free advice on your superannuation as a BUSSQ member. T&Cs apply.
Death, TPD
Receive a complimentary financial planning session with a Suncorp financial planner.
Death, TPD, Salary Continuance
Enjoy discounted rates on banking products with ME Bank.
Death, TPD
Access simple personal advice at no cost.
Death, TPD
Gain access to lifestyle offers and benefits on NAB financial products and services.
Death, TPD, Income Protection
Earn rewards and vouchers through the AIA Vitality program.
Death, TPD, Income Protection
A flexible industry super fund for people who work in Australia’s higher education and research sector.

Compare up to 4 providers

The information in the table is based on data provided by Chant West Pty Ltd (AFSL 255320) which is itself supplied by third parties. While such information is believed to be accurate, Chant West does not accept responsibility for any inaccuracy in such information. Chant West’s Financial Services Guide is available at . Finder offers no guarantees or warranties about the data and we recommend that users make their own enquiries before relying on this information. Performance, fees and insurance data is based on each fund's default MySuper product. Where the performance, fees and insurance data for the MySuper fund vary according to the member's age, results for individuals between 40-49 years of age have been shown. Past performance is not a reliable indicator of future performance.

Self-managed super funds

An option for people with an interest in and time to dedicate to managing their finances is a self-managed super fund.

Self-managed super funds, or SMSFs, are effectively smaller super funds set up by individuals or groups, to manage their own super contributions and investments. All the decisions around how the money is invested are made by the individuals who set the fund up, who operate as both members and trustees of the fund.

There are several steps to setting up your own SMSF, as well as ongoing requirements around administration, compliance and reporting. You can read more about what’s involved in setting up and managing an SMSF in our definitive guide on SMSFs. Once it’s established, you can arrange to have your employer contributions paid directly into your SMSF. You can then decide how to invest the funds - whether that means buying shares, investing in a managed fund, or depositing funds into a high-interest savings account.

Earn interest on your SMSF cash balance with a SMSF Savings Account

Rates last updated December 10th, 2018
Name Product Maximum Variable Rate p.a. Standard Variable Rate p.a. Bonus Interest p.a. Fees Min Bal / Min Deposit Interest Earned Product Description
AMP SuperEdge Saver Account
$0 / $0
Link to your SMSF. Ongoing, variable 2.05% p.a. when you link to AMP SuperEdge Cash Account or a different transaction account for your SMSF in another bank. Available on the entire balance.
$0 / $0
This account is for SMSF trustees to access their SMSF cash balance, to make payments and investments, and to receive income to the one account.

Compare up to 4 providers

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Shirley Liu

Shirley Liu is a program manager at finder, formerly the publisher for Banking and Investments. She is passionate about helping people make an informed decision, save money and find the best deal for their needs.

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4 Responses

  1. Default Gravatar
    KevNovember 21, 2017

    Dear Sir/Madam,my wife and l a.own our own home wife has an investment property(positively geared..value $ $220k.) c.we are selling a property and should have circa $150,000 net d.our combined super is circa $1 mill. My wife(58) is undertaking transition to retirement(a teacher with defined benefit super)I,m 59 self employed…and love my work!…..q. a.should we invest the $150k into our separate super fund($75k each) or purchase a house(we live close in Toowoomba and could purchase a rental property for under $400k..q.b.with all the doom and gloom scenarios re. world economy do you believe we shall be able to have a good quality of life in retirement..? We are conservative folk from humble origins with simple tastes but do like to travel os….your counsel is valued, cheers

    • finder Customer Care
      MayDecember 12, 2017Staff

      Hi Kev,

      Thanks for your inquiry and sorry for the delay. Just to confirm that you’ve reached finder, a leading comparison website and general information service. We’d be glad to offer you general advice to answer your questions.

      As we are not financial experts, we may not be able to advice as to how and when is the best time you can invest you super. It would be best that you speak to a financial planner who can help you achieve your financial goals and understand your needs. We have a guide on this page about seeking financial advice which you may find useful.


  2. Default Gravatar
    rof78@gmxNovember 7, 2016

    i am 62 thinking to retire .my husband 8=69. have b2 investment properties worth $1700.000 with a loan of $1000.000.want to sell one property ,but scare about c g t.How can avoid that capital gains tax

    • finder Customer Care
      ClarizzaNovember 8, 2016Staff

      Hi there,

      Thanks for your comment. We are a comparison website and as such, can provide general advice only. If you have any concerns or would like to discuss your personal situation in more detail, we recommend speaking to a financial planner.


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