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Understanding how investments work.

At Hostplus, we have a team of dedicated investment professionals who lead our investment choices and decisions.

Our goal is to make the best financial moves for our members. We also believe in helping our members learn and understand how money works and how you can take control of your financial future.

If you feel a little lost when it comes to understanding how investments work, don’t worry, you’re not alone. But understanding money and the way investments work can make building your retirement savings easier. Let’s explore the basics of investing.

Learn more about investing

Learning the basics of money management and the ways you can use your existing super to build a larger nest egg can have a big impact on your retirement.

Asset classes

Assets can earn you money. That’s the bottom line.

In investment terms, an asset is an investment used to gain a return. Assets are generally divided into asset classes such as cash, fixed income, property, infrastructure, equity and other (alternatives).

Risk and return

Risk and return are linked. In general, the lower the risk, the lower the expected return (or the lower the likelihood of a negative return). If you want to try for a higher possible return, you face increased risk and also expose your investments to a higher possibility of making a loss.

By using different asset classes you can mix higher risk investments with lower risk investments to provide you with the growth you want and the risk you’re comfortable with.

Understand your risk exposure.

Understand your risk exposure.

find out more about Understand your risk exposure. Learn more

Investment styles

Just as there are different classes of assets, there are different styles of investment.

  • Passive. Also known as index management. Seeks to equal a stock market index performance. (like the S&P/ASX100, for example)
  • Active.  Aims to beat a market index benchmark performance through asset allocation and careful selection of investments.
  • Enhanced Passive. The benefits of active management but with the risk controls of passive management.
  • Growth. The focus is on long-term growth over short-term capital gains.
  • Value. The aim is to discover temporarily under-valued assets and take profits when they become over-priced. A key tool is the price-earnings ratio valuation.
  • Top-down. A style that looks at the larger financial market and its effect on industry sectors before looking at individual stocks.
  • Bottom-up. A style that looks first at the performance of individual companies then compares them to their industry sector and finally the larger financial market.

Diversification

As the saying goes, it doesn’t pay to put all your eggs in one basket. The same is true for investing. The key to successfully managing risk is through diversification. 

Diversification means spreading your investments across a range of different styles so you have exposure to different asset classes. This could help offset poor performance that may occur in any individual asset class. For example, if one asset class is not performing well, another asset class may be experiencing better returns, helping to offset the losses of the poorer performing asset class.

If you’d like to learn more about diversification and other investment strategies, you may benefit from an appointment with a Hostplus financial planner. Hostplus members can take advantage of a no cost, no obligation initial appointment.

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This website is issued by Host-Plus Pty Limited ABN 79 008 634 704, AFSL 244392 as trustee for the Hostplus Superannuation Fund (the Fund) ABN 68 657 495 890, MySuper No 68657495890198. Hostplus Self-Managed Invest (SMI) is issued by Host-Plus Pty Limited ABN 79 008 634 704, AFSL 244392 as trustee for the Hostplus Pooled Superannuation Trust (PST) ABN 13 140 019 340. It contains general advice only and does not take into account your personal objectives, financial situation or needs. You should consider if this information is appropriate for you in light of your circumstances before acting on it. Please read the relevant Hostplus Product Disclosure Statement (PDS) or Hostplus SMI PDS before making a decision about Hostplus. For a description of the target market, please read the Target Market Determination (TMD), available at hostplus.com.au. You can view detailed disclaimers here. Hostplus has engaged Industry Fund Services Limited (IFS) ABN 54 007 016 195, AFSL 232514 to facilitate the provision of personal financial advice to members of Hostplus. Advice is provided by financial planners who are Authorised Representatives of IFS. Fees may apply for Comprehensive Financial Advice, further information about the cost of comprehensive advice is set out in the relevant IFS Financial Services Guide, a copy of which is available from your financial planner. Hostplus has engaged Link Advice Pty Ltd ABN 36 105 811 836, ASFL 258145 to facilitate the provision of limited personal financial advice to members of Hostplus via the web-based product Super Adviser.