28 April 2026

By Philippa Billings, Head of Advice and Compliance

Most people are in their super fund's default investment option without ever having actively chosen it. That's not necessarily a problem — default options are often well-designed for a broad membership — but it does mean that millions of Australians may be invested in a way that doesn't actually match their age, their timeline to retirement, or their tolerance for ups and downs in the market. Understanding how super investment options work is one of the more impactful things someone can do for their long-term retirement outcome.

What are superannuation investment options?

Inside most super funds, members can choose from a menu of investment options that vary by the mix of assets they hold and the level of risk they carry. The main categories are:

Growth or high growth options invest heavily in shares (Australian and international) and property. They tend to produce higher returns over long periods but can experience significant short-term losses. These options suit people who are earlier in their career and have time to ride out market downturns.

Balanced options hold a mix of growth assets and more defensive assets like bonds and cash. They aim for moderate growth with lower volatility than pure growth options. Many funds' default options sit in this category.

Conservative options hold a higher proportion of bonds, cash, and fixed income. They're more stable but typically produce lower long-term returns. These are often more appropriate for people closer to or in retirement.

Cash options hold money in cash or near-cash instruments. They offer the most stability but also the lowest returns — and are unlikely to keep pace with inflation over longer periods.

Some funds also offer socially responsible or ESG (environmental, social and governance) options, ethical options, and sector-specific choices like Australian shares or international shares.

Why does the choice of investment option matter so much?

The difference in outcomes between investment options over a long working life can be dramatic. A higher-growth option that returns 1–2% more per year than a conservative option, compounded over 30 years, can result in a final balance that is tens of thousands — or even hundreds of thousands — of dollars higher.

To illustrate this, an internal analysis of Otivo customers who fully implemented digital advice about their super investment options between January 2021 and December 2025 found that those customers were projected to be better off by an average of $138,645 at retirement.* This figure is a modelled projection based on a sample of approximately 12,000 customers, using each customer's actual fund, investment option, age, and balance at the time advice was provided. Projected outcomes were calculated using five-year historical net returns (after fees and costs) for each investment option and assumed contributions continued at the same rate until the customer's nominated retirement age. The figure represents an average across the sample — individual outcomes varied significantly depending on personal circumstances, and actual results may differ from projections. Past performance is not a reliable indicator of future performance, and this figure should not be interpreted as a guaranteed or typical outcome.

This analysis illustrates just how meaningful the choice of investment option can be, even without switching funds.

That said, higher-growth options come with higher variability, which matters more as retirement approaches. Someone with a large balance in a high-growth option who experiences a major market fall just before retiring may face significantly reduced retirement income if there isn't enough time for the balance to recover.

What is the "risk and return" trade-off in super?

Risk in superannuation generally refers to the likelihood of experiencing negative returns in any given year, and the severity of those potential losses. Higher-growth options can fall significantly in a downturn — losing 20% or more in severe market events, as happened in the GFC and briefly in early 2020. But over 10, 20 or 30-year periods, growth options have historically outperformed defensive ones by a meaningful margin.

A useful way to think about this is through the lens of investment horizon — how many years until the money will be needed. Someone who is 35 and won't access super for 30 years has a long runway to recover from a bad year. Someone who is 63 and planning to retire in two years has very little time to recover, which is why many people consider shifting towards a more conservative or balanced option as retirement draws closer.

What is a lifecycle strategy?

Some funds automatically adjust the investment option based on a member's age through what's called a lifecycle strategy. In these arrangements, younger members are automatically placed in growth options, and the allocation gradually shifts towards more defensive assets as they age.

Lifecycle strategies remove the need for members to actively manage their investment option, which suits many people who prefer a "set and forget" approach. The trade-off is that they may not reflect an individual's specific risk preferences or circumstances — for example, someone with other significant assets outside of super might prefer to maintain a more aggressive super strategy later in life than the lifecycle default would suggest.

How often can you change your investment option?

Most super funds allow members to change their investment option at any time, usually through online account access or via the fund's app. Some funds process changes immediately; others apply them at the end of the business day or within a few business days. There's typically no fee for switching, though it's worth checking the fund's product disclosure statement (PDS) to confirm.

Using a super calculator to understand the impact of your investment choice

A super projection calculator can model the difference between investment options over time, showing projected balances at different ages under different return assumptions. This kind of modelling can make the abstract concept of investment returns feel very concrete — especially when the difference between a growth and balanced option is shown as a projected dollar amount at retirement.

Otivo's investment options module helps people understand which super investment options could give them a better chance of extending their retirement income. It considers current age, current investment option, five-year historical returns and fees — and provides licensed digital advice on whether a change is warranted.

Frequently asked questions

What investment option should I choose for my super?

There's no single right answer — it depends on age, the number of years until retirement, comfort with market volatility, and overall financial position. Generally, people further from retirement consider higher-growth options; those closer to retirement often shift towards balanced or conservative. A superannuation estimator or licensed digital advice tool can help model the options for a given situation.

What is the default super investment option?

Most funds' default option is something like "balanced" or "MySuper" — a mid-risk option designed to suit a broad cross-section of members. These defaults are regulated and must meet certain return benchmarks, but they may not be the best fit for every individual. It's worth checking what the default actually invests in and comparing it to other options available in the fund.

Is it safe to switch investment options?

Switching between investment options inside the same fund doesn't involve selling and buying actual investments directly — it's a reallocation within the fund. It doesn't trigger capital gains tax and there's typically no fee. The main risk is poor timing — switching to a defensive option after a market fall, for example, can lock in losses before a recovery.

How does my investment option affect how long my super lasts in retirement?

This is one of the most important questions in retirement planning. People who continue to hold a moderate to balanced investment option in retirement — rather than switching entirely to cash or defensive options — often extend how long their super lasts, because their balance continues to grow. A retirement income calculator can model different scenarios.

Getting investment options right

Choosing a suitable super investment option is not a set-and-forget decision for life — it's something worth reviewing periodically, especially as circumstances change. The goal is to hold a level of investment risk that aligns with your timeline and comfort level, while giving the balance the best chance to grow meaningfully over time.

For many Australians, this is an area where a small amount of attention — through a digital advice tool, a superannuation retirement calculator, or a conversation with a financial adviser — can translate directly into a materially better retirement outcome.

• *The $138,645 figure is a modelled average projection, not a guaranteed or actual realised outcome. It is based on an internal analysis of approximately 12,000 Otivo customers who fully implemented investment option advice between January 2021 and December 2025. Projections used five-year historical net returns (after fees and costs) for each customer's relevant investment options, assumed ongoing contributions at the rate applicable at the time of advice, and projected forward to each customer's nominated retirement age. Individual results varied significantly. Past performance is not a reliable indicator of future performance.

Disclaimer

The information in this communication is current as at April 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.