Just like other superannuation funds, members of a retail superannuation fund will have their money invested into different shares, stocks and investments. This is done by professional investment managers.
The money in your retail super account comes from contributions made by your employer as well as any extras you put into it. This money is kept away and is accessed when you retire.
Retail super funds are usually accumulation funds, which aim to grow funds that are held in the accounts over time. Due to the investments it is important to note that with an accumulation fund you run the risk that when you retire, your super payout may be lower if financial markets have recently fallen or continue to fall during your retirement.
You may be offered a choice of investment options, each offering a different level of risk versus potential reward. For example, you may be able to select a growth option that may be able to quickly increase your super balance through riskier investments, a conservative option that may be able to help safeguard your super balance by sticking to lower-risk investments, or a balanced option that offers a little of both. The best investment choice for you will depend on your personal financial situation.
You may also need to pay fees for your retail super fund. Administration fees may be used to cover the fund’s admin costs, and investment fees may help pay financial advisers to recommend investment options. It’s important to consider the cost of super fees when comparing super funds.