Shares (sometimes also called ‘stocks’) may carry more risk than other asset classes, but their growth potential makes them a vital part of most long-term super investments.
Here we investigate shares and what role they could play in helping you reach your financial goals.
What are shares?
When you buy shares you’re buying a small portion – ie, a ‘share’ – of a company for the opportunity to benefit from:
- its future growth (through its share price), and
- its future profits (through any dividends it pays).
How does your super money buy shares?
If you’ve chosen a ‘balanced’ or ‘growth’ investment option in your super, some of your money will be invested in shares. Let’s assume you’ve chosen the Suncorp Growth Portfolio investment option in a Suncorp WealthSmart® super account. Around 40% of your money would then be invested in Australian and international shares.
What happens is this:
- Your money is pooled with that of other super investors and buys you a number of units in the Suncorp Growth Portfolio. How many units you get depends on how much money you invest and that day’s unit price. Every time you or your employer makes a contribution into your super account, you get more units.
- Suncorp gives the 40% of the total pooled money that is allocated to shares to one or more external specialist fund managers.
- Each fund manager then buys, sells and holds shares in Australian and international companies, across multiple industries, that are listed on each country’s stock exchange.
- Most shares generate income in the form of dividends (effectively, a way of paying shareholders some of the company’s profits). In super, those dividends are reinvested to grow the value of the overall portfolio – and hence grow your super account.
- Each company’s shares are traded on a stock exchange and will go up and down in price according to their changing demand. Levels of demand are affected by things like changes in the company’s profits, its prospects and those of the industry it operates in, and the overall state of the economy.
- Fluctuating share prices (and dividend income) determine the day-to-day price of units in the Suncorp Growth Portfolio. As the value of your units goes up and down, so does your super account balance.
Want to know more?
If you’re thinking about changing your investment mix, your financial adviser can help you understand the potential risks and make the right decisions to meet your long-term goals.
Suncorp Portfolio Services Limited (Trustee) (ABN 61 063 427 958, AFSL 237905, RSE Licence No L0002059) is the issuer of Suncorp WealthSmart Personal Super, Suncorp WealthSmart Pension, Suncorp WealthSmart Business Super, and Suncorp WealthSmart Term Allocated Pension. These products are part of the Suncorp Master Trust (Fund) (ABN 98 350 952 022, RSE Fund Registration No. R1056655). Unless otherwise stated, the Trustee and any other company within the Suncorp Group do not guarantee the repayment of capital or the performance of these products. This product is not a bank deposit or other liability of Suncorp Bank (Suncorp-Metway Limited ABN 66 010 831 722) (SML) and is subject to investment risk including possible delays in repayment and loss of the interest and principal invested. SML is not liable or responsible for, and does not guarantee or otherwise support, these products.