Superannuation is a risky business How much risk are you willing to take? ANYONE who has decent coin in their bank account will tell you that to earn big, you have to bet big. That means, take some risks. So just how far are you willing to go when it comes to super? High-growth, superannuation funds have been the best performers in the past couple of years as sharemarkets in Australia and overseas rose sharply, but experts say the party won't continue forever. Can you stomach the volatility of dialling up your risk? Here's a guide to help you find out. Two thirds of Australians have their super sitting their fund's default "balanced" option, which typically holds 50-70 per cent of the money in growth assets such as Australian and international shares and property. High-growth super funds usually have 80 per cent or more of your money in these riskier assets, creating the potential for bigger gains but also bigger falls. The lower risk investments held by both fund types include cash, fixed interest assets such as government bonds, infrastructure and mortgages. Several super funds are putting new members into life cycle funds, which adjust the level of risky assets depending on your age. So a 30-year-old may have 80-90 per cent of their super invested in growth, reducing over time to below 50 per cent as they head into retirement. "For young members, most advisers will put them into higher growth," says SuperRatings CEO Adam Gee. We asked five industry experts for their insights into high-growth super funds and what people can expect in the year ahead. Morningstar director of manager research Tim Murphy: "Higher-risk assets have tended to outperform low risk bonds and very low risk cash over the long term, but in short-term periods that relationship doesn't always hold true," he says. In 2008 when there was a big correction, higher-growth assets lost more money in that year. The long-term nature of super means that even the default balanced funds used by a majority of Australians have plenty of exposure to higher-risk assets such as shares. SuperRatings CEO Adam Gee: High-growth super funds delivered a 15.8 per cent return for the 2013-14 financial year, but in the first four months of this financial year the returns have totalled about 2 per cent, potentially pointing to a 2014-15 annual return of just 6-8 per cent, Gee says. When we talk to fund managers, their views are we are not going to see it shooting the lights out over the next 18 months. Rainmaker Group research director Alex Dunnin: "When you get into the higher-growth space you get into investments with a higher tilt towards Australian and international shares," he says. Some high-growth options are all shares. The sharemarket bounces around a lot so it's hard to predict returns, but you can predict that funds in the leading bunch this year will probably stay there for the next couple of years. Dunnin says the falling Australian dollar is good for super funds with big overseas share investments, because every dollar earned offshore is worth more as our currency weakens. Chant West investment research manager Mano Mohankumar: "We have had two very strong financial years and we certainly don't expect returns like that going forward - we expect more modest returns," he says. Mohankumar says high-growth super funds are best suited to those with many years left until retirement, although some people argue that bigger balances benefit more from strong sharemarket gains. However, older people can also be burnt badly if markets crash late in their working lives, as happened during the global financial crisis. "You do need to have a high risk tolerance," he says. Industry Super Australia CEO David Whiteley: "It is important to take a long term perspective in these options rather than focus on shorter term returns, as investing in growth options usually means more market ups and downs," Whiteley says. He recommends getting advice from your super fund or a financial advisers if you are thinking about changing your fund or investment mix. If you are being recommended a super fund, you should always ask whether the person recommending it is being paid any kind of incentive. This story appeared on Money Saver HQ. For clever ways to save money, visit moneysaverhq. Originally published as What thrillseekers know about money