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Vision Super’s default investment option, Balanced Growth, returned an exceptional 10.35% for the financial year. Most of our members are invested in Balanced Growth, which has now generated positive returns nine years in a row. The median return for super funds’ default options was 8.78% for the year, so Vision Super performed significantly better than the median.

 

Vision Supers Balanced growth option returns to 30 June 2018
 

1 year

3 years

5 years

10 years

Super

10.35%

8.20%

9.48%

6.30%

Retirement

11.23%

8.96%

10.46%

7.37%

 

While it was a very good year for Balanced Growth, superannuation is a long-term investment – for most of us, our money will stay in the super system from when we start earning it, until we retire. This means looking at longer-term growth, and how much your investment option returns over longer periods, may be more important that looking at a single year. This is particularly important for options like Balanced Growth that include a significant investment in shares – also called equities – which may go up or down in any given year. Over ten years, Balanced Growth has returned 6.3% - inflation over the same time has been around 2% or less, so this represents a solid return of more than 4% over and above the increase in the cost of living over the same period.

Performance for both the 2017/18 financial year and longer periods for all Vision Super options is available here.

The year in review

It was an interesting year, with global politics influencing the share markets, and tech companies like Amazon and Netflix performing strongly. The financial sector, however, did relatively poorly as interest rates rose in the US – although they still remain low by historical standards. Inflation is still one of the key factors influencing interest rates, and it remains low in Australia so the Reserve Bank of Australia has left interest rates here unchanged over the year at 1.5%.

Challenges ahead

Looking ahead, financial markets are facing some challenges. Rising US interest rates may see some companies struggling with debt, labour shortages in some areas in the US may lead to higher inflation, and in turn to higher interest rates and perhaps then recession – which would affect economies around the world. Whether the tech sector will continue to perform as strongly as it has is unclear, and the gradual decline in Australian property prices, the high debt levels of Australian consumers, and slowing of Chinese growth will all pose challenges to the outlook this year.

What does it mean for you?

Superannuation is a long-term investment – while share markets go up and down all the time, the aim is to get to retirement with a nest egg that will support the lifestyle you want. This means different things for different people – and we all have different levels of comfort with investment risk, so there’s no one-size-fits-all solution to how you should invest your money.

We’re here to help – Vision Super members can access one-off personal advice about investment options free of charge. You can email us or call 1300 300 820 to set up a time to get advice from one of our qualified Financial Planners, over the phone at a time that suits you.

 

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