Super investment options for under-25s, default versus balanced, growth and high-growth

Every Australian super fund lets you choose how your balance is invested. Most members never make a choice, and the fund parks them in the default MySuper option. For someone in their 60s nearing retirement, that default is often appropriate. For someone under 25 with 40 years to preservation age, it may be unnecessarily conservative.

This explainer walks through the four common option labels (default, balanced, growth, high-growth) and what they actually do at the asset level.

What "default" usually is

Every MySuper-authorised product must publish its strategic asset allocation. The default option is what your contributions land in if you never log in to your fund's website and change anything.

Two structural shapes are common:

• Single diversified default. Roughly 70 to 80 percent in growth assets (Australian and international shares, listed property, infrastructure) and 20 to 30 percent in defensive assets (bonds, cash). The mix stays the same for every member.
• Lifecycle default. The growth allocation is high for younger members (typically 85 to 95 percent for under-40s) and steps down through the member's working life so that by age 60 the mix is roughly 50/50 growth/defensive. The fund switches the cohorts automatically on your birthdate.

Lifecycle defaults look sophisticated but they are coarse. Two 30-year-olds in the same lifecycle product end up with identical asset mixes regardless of whether one has $200,000 in shares outside super and the other has$2,000 in cash. The Australian Prudential Regulation Authority (APRA) publishes annual MySuper product performance data so you can see exactly what your default contains.

The labelled options

Beyond the default, most funds offer a range of pre-mixed options. The labels are not regulated, so what one fund calls "balanced" another may call "growth", but the rough asset shapes are reasonably consistent.

Option label	Growth assets	Defensive assets	Typical range of 1-year returns
Conservative	30 percent	70 percent	-3 to +8 percent
Balanced	60 to 70 percent	30 to 40 percent	-7 to +14 percent
Growth	75 to 85 percent	15 to 25 percent	-10 to +18 percent
High-growth	90 to 98 percent	2 to 10 percent	-15 to +22 percent

Growth assets are listed shares, listed property, infrastructure, and (in some funds) unlisted property and unlisted infrastructure. Defensive assets are government bonds, investment-grade corporate bonds, term deposits and cash.

The ASIC Moneysmart investment options page keeps a current comparison of fund-published returns by option type.

Why under-25s often pick growth or high-growth

Three structural facts make a higher-growth allocation a reasonable default consideration for someone with 40-plus years to preservation age:

1. Time horizon. Equities historically deliver higher long-run returns than bonds, but with sharper short-run drawdowns. Over a 40-year horizon, the share of years in drawdown is small. APRA data shows that over rolling 20-year periods to date, the all-shares allocation has outperformed the balanced allocation in every period.
2. Sequence of contributions. A 22-year-old's super balance is dominated by future contributions, not the current balance. A 30 percent fall on a $5,000 balance is a$1,500 paper loss; the same percentage on a $500,000 balance at 55 is a$150,000 paper loss with much less time to recover from future contributions.
3. No early access risk. Unlike money in a savings account, you cannot withdraw super in response to a market panic (outside the very narrow First Home Super Saver and severe hardship rules). The lock-in protects against the worst behavioural mistake in investing, which is selling after a fall.

The trade-off is sequence-of-returns volatility. A high-growth option can be down 25 percent in any single calendar year. The discipline is to keep contributing and not switch to cash after the fall, because every historical study of that switch shows it harms the long-run outcome.

How to change your option

The mechanics differ by fund but the pattern is consistent:

1. Log in to your fund's online portal.
2. Find the "investment option" or "change investments" page.
3. Pick a new allocation. Some funds let you mix multiple options (for example 70 percent high-growth, 30 percent international shares).
4. Choose whether the change applies to your existing balance, future contributions, or both.
5. Confirm.

Most funds process the switch in 5 to 10 business days. There is usually no fee for the first one or two switches per year.

The ATO's super for individuals pages confirm that switching investment options inside the same fund does not trigger capital gains tax for the member because legal ownership remains with the fund trustee.

What you actually do at 18

Three actions cover most of the upside:

• Log in to your super fund's portal once. Confirm the current investment option, the current asset allocation behind it, and the fees being deducted.
• Decide consciously whether the default is what you want. If you have decades to preservation age and no specific reason to avoid volatility, a growth or high-growth option may be more aligned with your time horizon than the default.
• Set a calendar reminder once a year to log in and check. You do not need to trade; just make sure the option you chose is still the one in place and that no insurance premiums or fee changes have eroded the balance.

This is general explanatory information, not financial advice. For advice on which investment option suits your circumstances, see a licensed financial adviser or use the free comparison tools on ASIC Moneysmart and APRA.