What type of investor am I?

Before you invest, you need to understand more about what sort of investor you are. We all want our returns to be as high as possible, but do you enjoy taking risks or will you lose sleep over a market downturn? And how long do you have until retirement?

Do I need income or growth?

Choosing what type of investments, or asset classes, you should be investing in will depend on how long you have until retirement.

At a glance

  • Asset classes can be divided into growth and income.
  • Growth assets aim to deliver capital growth above inflation over the long-term.
  • Income assets aim for steady income and capital protection.
  • Choice will depend partly on your investment timeframe.
  • Funds generally use a mix of growth and defensive assets.
  • Investors should consider the actual mix of a fund and their timeframe.

The closer you are to retirement, the more you may want to protect, or defend, your money from adverse share market movements. You may be more likely to invest in defensive, income-producing assets. Once retired, you may want to invest a greater proportion of your money in cash, where there is no risk to your capital.

Similarly, the longer your timeframe, the more chance you will consider growth assets, where the aim is to enjoy higher returns than inflation, and where time may smooth out any short-term highs and lows.


Asset classes can be divided into two categories:

Growth assets

  • They aim to produce capital growth above inflation over the long-term.
  • Examples include listed and unlisted property, Australian and international equities and hedge funds.

Income assets

  • Also known as defensive assets.
  • They aim to produce regular income in the form of dividends or interest and protect the value of the original investment (capital).
  • Examples include cash and fixed interest investments such as bonds.
  • The value of fixed interest securities, such as bonds, can vary with changes in interest rates.
Asset Class Provide Best suited for
Australian shares Growth Long-term investors
Longer than 7 years
International shares Growth Long-term investors
Longer than 7 years
Property (Listed and unlisted) Growth Medium to long-term investors
Longer than 5 years
Fixed interest Income and some growth Short to medium-term investors
Cash Income Short-term investors

Looking for a diversified fund?

There are funds offering a mix of growth and income-producing assets. They vary in their investment mix and generally can be categorised as:

Growth: These tend to invest heavily in international shares, Australian shares, some property and alternative investments (80% to 90%). Some money is held in fixed interest investments (up to 30%).

Balanced: These typically invest more in growth investments (60% to 80%) with the remainder in defensive assets.

Conservative: These will invest in cash and fixed interest investments, such as bonds, which can vary in value depending on interest rate movements, so the capital value can change (total 70%) and are mainly income based. They will also invest in some growth assets (30%).

Cash: these will invest in a mix of cash and safer fixed interest investments, such as fixed term investments, where there is less risk to capital.

It's important to look closely at the investment mix of the fund, as there are a myriad of variations in the market, even with the same name.

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