Deciding where to invest

A growth strategy focuses on investments that have a higher chance of producing greater returns over the long-term. These higher returns will also involve more risk, and the value of your savings may fall significantly during times of volatility. Time is the key to a growth strategy. You’ll want to make sure your investments have time to recover from any setbacks so they can potentially go on to grow in the future.

This approach may suit you if you have many years to wait until you access your money. If you are considering choosing a growth strategy, you should be comfortable with the higher level of risk associated with achieving higher returns over the longer term.

When looking for funds that suit a growth strategy, check the fund’s objectives and risk rating on the fund factsheet. Typically, the higher the risk, the more growth potential there is. The fund names themselves may give you a clue as to the strategy (‘equity’, ‘opportunity’, etc), but fund names don’t show the full picture so, it’s important to understand the details.

A balanced strategy aims to achieve a balance between investments that offer high growth potential, with a relatively high level of risk, and those that may offer some security. The aim is to provide some protection for the growth that has already been earned on your savings while ensuring there is still the potential for some growth in the years before you retire.

While not as risky as a growth strategy, there is still some risk involved. Investors can achieve this balance by combining different types of funds or by simply focusing on investment funds that offer a medium level of risk and growth potential.

A balanced approach may suit you if you are only prepared to accept a limited amount of investment risk for a variety of reasons.

When looking for funds that suit a balanced strategy, check the fund’s objectives and risk rating on the fund factsheet. Typically, balanced funds will have a risk rating of M1 or M2, with M2 offering slightly more risk. The fund names themselves may give you a clue as to the strategy (‘balanced’, ‘multi-asset’, etc), but fund names do not show the full picture so, it's important to understand the details.

A conservative strategy focuses on lower‑risk funds so there is less chance of your savings/investments suffering short‑term losses. These funds may hold cash deposits and the more secure types of bonds. By moving away from share-based funds, you can help protect your investments from the danger of a sudden drop in the stock market.

However, the potential returns from conservative investments tend to be lower than higher risk options.

A conservative strategy may suit you if you are relatively close to accessing your money. It’s important to remember that even if the risk of the value of your investments falling is relatively low, this will be replaced by the risk of inflation eating into the value of your savings if it isn’t growing enough to meet your individual goals. Following a conservative strategy could mean your savings may not grow as much as you need in order to reach your individual goals.

When looking for funds that suit a conservative strategy, check the fund’s objectives and risk rating on the fund factsheet; the lower the risk, the more conservative the strategy. The fund names themselves may give you a clue as to the strategy (‘cash’, ‘defensive’, etc), but fund names do not show the full picture so, it's important to understand the details.