Investing outside super

Superannuation is becoming the main financial investment that Australians rely on to fund their retirement. With the current market conditions, many Australians wishing to retire are hesitant to cash in their super balance, and are consequently forced to continue working. This highlights the need for diversification in retirement investments.

Depending on your stage in life and attitude towards risk, we outline below the different types of investments available to you:

  • Home ownership
  • Investment Properties
  • Shares
  • Savings accounts & term deposits
  • Managed funds

Home ownership

Historically, the rate of home ownership has been very high and therefore played an important role in retirement planning. This is because the family home is generally owned by the time people retire, and many choose to ‘downsize’ their home, living on the profits during retirement. However, these days many Australians are opting to rent rather than buy, resulting in superannuation becoming their biggest (and perhaps the only financial investment they will make) and therefore the main source of their retirement savings.

However, this isn’t to say that home ownership is recommended over renting – in fact, if you are strict with yourself and invest the money you would otherwise put towards a mortgage, you could end up with more money than you would after selling your home.

Investment Properties

Buying a property to rent out should be considered as a long-term investment. There are many factors to consider before you delve into the property market, some of which include:

  • There are tax benefits – the interest on the loan is tax deductible
  • Becoming a landlord requires responsibility – you can either manage the property yourself, or pay an agent to do it for you
  • If you own your own home and an investment property, you may be too focused on one asset class – no diversification
  • Negative equity – if the property’s value declines and becomes less than the amount owing on a loan
  • Change in interest rates – an increase will affect your disposable income and the return on your investment
  • There may be instances when you have no tenant and will have to cover the costs
  • Property is considered a less volatile investment compared to shares


People buy shares for two reasons – to make profits on share growth, or to receive income from dividends. When you purchase shares, you become a part owner of a company.Shares are a volatile investment, but are a great way to diversify your portfolio. Before you invest in your shares, you should become familiar with the risks and the benefits.

Savings accounts & term deposits

Cash accounts and term deposits are generally a less risky and more stable investment when compared with shares. Therefore, if you are a conservative investor, or have a short time-frame before you need to access your funds, you may require a much higher portion of your money in this type of investment option.

Investment Funds

Investment Funds (also known as Managed Funds) are pooled funds that enable smaller investors to collectively invest into larger assets that would not be viable for them as individual investors.

These funds are not superannuation so you can access your money at any time. However, accessing the funds is not as easy or quick as a bank account. It normally takes 7-10 business days for the proceeds of a withdrawal to be credited to a bank account.

There are many types of Investment Funds available, ranging from diversified investment funds to investment sector funds. Each has specific advantages and disadvantages. Generally, the advantage of Investment Funds is that an investor purchases units, most of which are valued daily or weekly and, can be redeemed at any time. Investment Funds will normally credit both income and growth to an investor’s account:

  • The income is assessable, meaning that the investor must include this in their tax return, and pay any tax due. However, there are often franking credits that flow through to the investor.
  • Capital growth is mainly only assessable when the investment is redeemed and, if investments are held for longer than 12 months investors may benefit from the 50% Capital Gains Tax (CGT) discount.
  • Allows people who are retired and not able to pay money into super to invest.