Best Investments for Retirement in Australia

Daniel Brown

Financial ExpertUpdated on October 9, 2023

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We all know that we should be making preparations for the future. But figuring out where to start saving for retirement – or investing for retirement – isn’t so simple.

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Finance is a mystery to most people. It’s filled with jargon and complicated, technical terms that make it difficult for the average person to understand. 

One of the most challenging parts of finance is investing your money in such a way that it grows over time – especially when it comes to retirement. Part of this challenge is caused by low-interest rates, high costs, and a lack of expert financial knowledge or guidance.

So, what are the best investments for your retirement?

The Importance of Investing

Planning for your investment is a significant part of managing your retirement finances.

When you retire, you will no longer have a regular income; therefore, you need to manage your money well and make the right long-term choices.

The goal here is to make your money grow even over the course of your retirement. 

Watch Out for Inflation When Making Investments

A crucial thing to know about retirement investing is the risks of inflation rates.
Inflation is when the cost of everything goes up every year, which is measured and tracked by the government.

When the cost of living rises, your investments may need to change. Over time, the need for change can become significant the longer that you are retired. Therefore, having an investment lump sum that will generate income is a good idea to keep up with inflation. 

What you can do is determine how your retirement funding model looks currently and how it would look in a few years with higher inflation. Doing so will help you find ways to protect your retirement funds and give yourself a greater chance for a secure retirement. 

How to Choose the Right Investments for Retirement

How you choose to invest your money will depend on the type of investor you are. When it comes to super, you need to consider a few factors: how long you’re investing for, how involved you want to be, and how much risk you’re comfortable with. 

Think about how long you want to invest and how long you want the savings to last once you retire. This is important even if you don’t know yet when you will retire because this will lead you closer to the right option that matches your goals. 

Also, before you make a choice, think about how much control you want over the investment; how much involvement do you want? 

Finally, how much risk are you willing to tolerate? This will largely depend on how long you have to invest. 

If you choose to invest within a short time, the short-term fluctuations could impact your savings. On the other hand, investing over a longer period will mean that your investments will have more time to ride out the ups and downs. The main risk here is keeping up with wage inflation. 

Keep in mind that different types of assets have different levels of risk. Therefore, it’s essential you educate yourself before you take the plunge. Doing so will help you come up with a more informed decision.

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How Much Do You Need to Retire Comfortably?

To know how much you need to retire comfortably in Australia, calculate the money you might have, how long it will last, and how much you’ll need in retirement. Fortunately, there are retirement calculators online you can use for this. 

Remember, the money you need for retirement is based on many factors, including: 

  • Lifestyle
  • Future Plans
  • Years You’ll Spend Retired
  • Current Salary
  • Super Balance
  • Assets

The money you need to fund your life in retirement will come from different sources: 

  • Superannuation: It’s important you are updated with your super balance because it will be significant to your retirement savings. 
  • Age pension: You could be eligible for a full, or part-age pension, or you may not be eligible for government assistance at all. 
  • Investment, savings, and inheritance: This involves the money you will get should you downsize your home, sell shares or use the money in your savings account to help with your retirement funds. 

What Are Your Investment Options?

As mentioned, you have different investment options. Today, they fall into two broad categories: defensive and growth assets. 
  • Defensive: This offers less opportunity for growth, yet it’s more stable and secure for your original investment. A good example of a defensive asset is a term deposit, in which you will earn a fixed interest rate, but you get your original deposit back at the end of the term. 
  • Growth: This aims for capital growth that has a huge potential for higher investment returns over the longer term. 

Let’s dive deeper into your options here: 

Term Deposits

This is a lump sum investment for a specific term by an approved deposit-taking financial institution. It will generate interest at a fixed rate over the period of the term. Additionally, it won’t be affected by market fluctuations. 

One of the best things about a fixed return is that it delivers a certain level of security and peace of mind; therefore, it’s attractive to many. However, the return is limited to the agreed interest rate for your chosen term. 

Finally, a term deposit will have your capital locked away throughout the term. You may be able to withdraw your money when necessary, but you will be charged for this. 


Also known as equities, investing in shares means you buy a share of ownership in a company. Therefore, you will become a shareholder who is entitled to any dividend payment the business makes. 

If you want to invest in shares, you can do so through a broker or a wide range of products. 

When investing in shares, you need to think of the costs associated with buying and selling them. Also, there are risks, yet you can limit them depending on the amount of risk you’re willing to take on. 

You will find some share portfolios with a lower risk profile because they are primarily invested in stocks and companies with a consistent track record for returns. 

On the other hand, portfolios with a higher risk are the ones that can be potentially affected by market volatility. However, they may also be the ones that have more potential to generate higher returns. 

The best thing to do here is to diversify your portfolio by having a mix of industries and asset classes with different perceived risks. Doing so will let you have relative security of lower-risk investments and the potential for greater returns with higher-risk profiles. 


You have the option to invest in either residential or commercial property. This comes with high costs when you own the property. Still, direct investment property has a lot of benefits because you’ll get income from rent, current tax incentives and the possibility for capital gain on your investment over time. 

On the other hand, there are ways you can invest in property indirectly, such as through a managed fund or a Real Estate Investment Trust (REIT). Indirect property investment will give you exposure to property through an asset. In that sense, you will be facing lower costs compared to direct investment property. It will also generally require a lot smaller initial investment amount than with direct property investment.

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Is a Super Fund Investment Worth It?

You can also invest in various assets inside of super. Most super funds will provide you with investment choices. The main benefit of investing in your super fund is you could get more savings on investment income tax. 

On the other hand, the main disadvantage of investing in super is the money and investment earnings will be locked away until the preservation age and/or until you meet a condition of release. 

If you’re looking for more flexibility from a super fund, though, consider a Self Managed Super Fund (SMSF). However, it comes with significant costs when setting up and managing it. 

The Right Investment Strategy

When it comes to investing for your retirement, there is no one-size-fits-all solution. This is why you need to come up with a strategy that will work based on your personal circumstances. 
  • Review your finances: You need to review your financial situation first by sorting out what you owe and what you own. Your assets will include your super, home, savings, and other investments. By sorting them out, you get to see what savings you can invest and how you can diversify. After this, sort out your income and expenses to determine how much you can put toward regular investments for retirement. 
  • Set your financial goals: For every goal, include the amount of money you will need and how long it will take for you to reach it. Divide your goals into short, medium, and long-term objectives. This will help you choose the right investment to reach each goal. 
  • Know the risks: We have discussed risks in this post, but it’s essential that you know them as part of your strategy. There are different risks, such as an interest rate risk that changes, which can reduce your returns or cause you to lose money. Market risk is when an investment falls in value due to changes in the economy or other events. There’s also the sector risk when the investment falls in value due to events that affect that specific industry sector. Be mindful of the many risks involved before you invest your money. Doing so will help you make an informed decision. 
  • Understand your risk tolerance: This is your ability to cope with dips in the value of your investment. Some of the factors that affect your risk tolerance are your age, capacity to recover from financial loss, financial goals, and health. That said, each investor’s risk is different. It’s crucial you understand your risk tolerance to help you find investments aligned with it. 
  • Build your portfolio: Now when it’s time to build your portfolio, you need to consider your financial goals, time frame, and risk tolerance. For your short-term goals, it’s best to stick to lower-risk investment options, such as a term deposit or savings account. On the other hand, investments with higher returns are better for longer-term goals, such as property and shares. 
  • Monitor your investments: Review your investments regularly to ensure they remain relevant to your objectives and that they’re performing as expected. 

Build Your Wealth

Finally, you want to make sure you’re on the right track toward creating that ideal financial future. There are many ways you can do this. First, automate your savings to impose financial discipline on yourself. Have a strict budget that includes an automatic deposit into your savings account. 

Second, do a regular stocktake to ensure that you’re meeting your financial goals. Next, avoid high fees as much as possible. For example, you can take advantage of internet banking to set up periodical payments for regular bills. Doing so will help you avoid late fees. 

You should also consider low-fee credit cards and only use credit card cash advances in an emergency. 

Fourth, you need to stick with the market by maintaining your investment strategy. Daily fluctuations or gloomy predictions will happen, but it’s essential you don’t panic. Stick to your core principles and focus on the big picture. 

Finally, minimise your financial risk through careful asset allocation. Diversify to balance risk and return well. Also, make sure you have the right insurance for health, car, homeowner’s, and a lot more. 

Here’s to a Secure Retirement

We all know that we should be making preparations for the future. And if you’re over 40, you’ve probably been told time and time again that you need to start thinking about your retirement savings. But figuring out where to start can be a bit daunting. 

Searching for the best investments for your retirement can be very difficult, especially with so many factors to take into account. There are so many different types of investment vehicles with their own pros and cons. Use this information to help you get started and secure your retirement as early as now. 

What if you could launch your investment journey with the guidance of an experienced finance expert instead of taking the all too common ‘hit-and-hope’ approach?

Many people may be unaware of this…but just like you, 41% of Aussies intend to get financial advice rather than going it alone, according to an Australian Securities and Investments Commission (ASIC) report.

Learn how to choose the best possible investment options that match your financial goals and situation by consulting with qualified finance experts like financial advisers. 

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If you feel overwhelmed by a tidal wave of options and don’t know where to start, you can reach out to your MMS Money Mentor to help get your money sorted.
Manage your money better by having a quick chat with your MMS Money Mentor today!

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