Your super portfolio can hold a mix of different assets. Think cash, bonds, property, and one of the most popular choices – equities.

For many Australians, equities have a natural place in super. They offer growth potential, but they also come with risks worth understanding.

In this article, we’ll step through what super is, what equities are, and why people often include them in their portfolios. We’ll also cover the potential benefits, risks, and different ways people can add equities to their super.

Hopefully, this will give you a clearer picture of how equities fit into the bigger picture of long-term investing through super.

How does superannuation work in Australia?

Superannuation (a.k.a. super ) is a long-term savings system designed to help Australians build money for retirement.

Employers contribute a percentage of your salary into your super fund under what’s known as the super guarantee . You can also grow your super faster by making voluntary contributions if you choose to.

Once inside your super, the money is usually invested across different assets like shares , property , bonds or cash. Over time, these investments can help your balance grow, although returns can vary over time.

Access to your super is generally restricted until you meet a condition of release, such as reaching your preservation age .

How your super is invested can make a real difference to the amount you retire with.

What are equities?

Equities , often called shares, represent ownership in a company. When you buy equities, you become a part-owner of that business. Owning equities gives you the chance to share in a company’s success. If the company grows, the value of your shares may rise.

Some companies also pay dividends – a portion of their profits distributed to shareholders – which can potentially provide regular income.

Equities can be local, like businesses listed on the Australian Securities Exchange (ASX) ; or global, offering exposure to industries and economies around the world.

They’re different from other assets like bonds or cash. Bonds are typically loans to governments or companies, while cash tends to sit in savings or short-term investments.

Unlike bonds or cash, equities aren't designed for steady returns. Their value can rise or fall depending on company performance and broader market conditions. Because of this, equities often carry more risk, but they also offer greater growth potential over the long term.

What are the potential benefits of including equities in a super portfolio?

Equities can bring several potential benefits to a super portfolio. Here’s a closer look at why people often include them:

Potential for long-term growth

Over long periods, equities have historically offered higher returns than more defensive assets like cash or bonds.

While cash keeps money safe and bonds provide steady income, equities can grow faster as businesses expand and profits rise.

Compound returns work over decades

Super is a long-term investment by design.

When equities earn returns shared through dividend payments, you can reinvest the dividends to earn even more over time. This process is called compounding . Small gains in the early years can snowball into larger amounts after 30 or 40 years.

Exposure to innovation and economic growth

Owning equities can mean investing in companies that drive change – like new technologies, medicines, or services. As businesses succeed and economies grow, shareholders may benefit from rising share prices and dividends .

Diversification

A well-built equities portfolio doesn’t rely on one company or industry.

It can spread investments across different sectors, like healthcare, energy, and finance, and across countries too. This spread, also known as diversification , can potentially help reduce the impact if one part of the market struggles.

Protection against inflation

Inflation makes everyday costs rise over time, reducing what your money can buy. Equities have the potential to outpace inflation because companies can often raise prices or find new ways to grow their profits.

While these potential benefits are appealing, it’s important to remember they’re not guaranteed. Equities can rise and fall, and past performance doesn’t predict future outcomes.

What are the risks of including equities in a super portfolio?

As we’ve said, equities offer potential benefits – but they also come with risks that are important to understand. Some of the key risks include:

Volatility

Equity prices can move up and down quickly, sometimes for reasons outside a company’s control.

This can be unsettling, especially for investors closer to retirement who have less time to recover from losses.

No guaranteed returns

Unlike cash or some bonds, equities don’t offer certainty. A strong past performance doesn't guarantee future success, and prices can fall without warning.

Market downturns

Super balances can drop during periods when share markets fall sharply. When a market price falls 20% or more from a recent high, it's called a bear market .

If retirement is decades away, short-term losses may feel less critical. Closer to retirement, timing can have a bigger impact.

Behavioural risks

Watching a super balance shrink can trigger emotional reactions .

Some people might feel tempted to switch investment options at the wrong time, locking in losses instead of riding out the cycle.

These risks don’t make equities “bad” investments. They highlight the importance of understanding how different assets behave – especially when planning for retirement . Because super is designed for the long term, many people feel more comfortable with some equity exposure despite the risks.

How can someone add equities to their super portfolio?

If you’re thinking about including equities in your super, there are a few ways you can do so:

• Select an equity-weighted investment option through your super fund : Most industry and retail super funds offer a range of pre-mixed options. Options labelled "high growth" or "shares" usually have a larger allocation to equities compared to defensive assets .
• Self-managed super funds (SMSFs) : Not everyone wants to pick shares or run an SMSF – and that’s okay. SMSFs allow individuals to manage their own super investments. Members can directly choose shares, exchange-traded funds (ETFs) , or other assets that suit their preferred strategy.
• Invest directly in shares or ETFs through super providers that allow it : Some super providers allow members to pick individual ETFs within their account, offering more control.

Some people prefer ready-made options, while others like building their own portfolio. And not every super fund or provider offers the same level of choice.

It’s worth checking what’s available before deciding which path suits your goals and comfort level. As circumstances and goals change, it can help to check if your super investments still suit your needs.

Your super, your strategy

There’s no perfect asset mix that suits everyone.

The right approach depends on your goals, timeline, and how comfortable you’re with investment risk.

As we’ve seen, equities can play a powerful role in building a super portfolio. But they also come with ups and downs that are important to understand and factor into your strategy.

If you stay curious, keep learning, and think about the bigger picture, you might be better placed to make informed decisions about your future.

After all, when it comes to super, time is one of your greatest allies.

Remember that building your super portfolio is a marathon, not a sprint.

Happy investing!