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CFS offers a broad range of single and multi-sector index options that can form the foundation of a low-cost diversified portfolio, either as an off-the-shelf multi-sector solution or a combination of different asset types to suit individual risk appetites and objectives.
Index investing as part of a core satellite strategy allows investors to achieve quick and easy diversification across different asset types, sectors, or regions.
By using lower-cost index funds as the core of a portfolio, investors can minimise expenses, thereby improving overall returns.
By pairing active and passive components, investors can potentially benefit from the expertise of fund managers while maintaining the cost advantages of index investing in the core.
How does an annuity work?
An annuity gives you a guaranteed amount of income for a set period of time (say five, 10, 20 or even 40 years) or the rest of your life. If you choose a fixed payment option, you know how much income you’ll receive and how long it will last. It can give you a steady, reliable income so you can live the life you want.
You pay a lump sum to the annuity provider and they invest the money for you. You can buy an annuity using a lump sum from your super or savings outside of super.
If you choose a fixed payment option, the annuity provider takes on all the market risk. This means you get guaranteed, regular payments for a period of time that you choose – regardless of how the market performs.
At the end of the annuity term, you could choose to get a maturity amount. That’s whatever’s left of the original lump sum you paid, plus any investment earnings.
The amount of income you’ll receive depends on:
- how much you invest
- the term of the annuity
- how much leftover money you want to receive at the end of the term (if any)
- the interest rate at the time you invest
- the type of product you choose.
An annuity can be used together with other sources of income retirement, such as an account-based pension or the government Age Pension.
Why might an annuity work for you in retirement?
A guaranteed annuity could be right for you if you’d like a guaranteed regular income for a fixed amount of time – or even for your lifetime. Unlike other retirement income streams, if a fixed payment option is chosen, your guaranteed annuity income won’t be affected when financial markets go up and down.
An annuity could also work for you if you want some flexibility around your retirement income. It enables you to choose from a range of income options, including:
- Fixed term or lifetime options – choose the number of years that you want to receive an annuity, or choose to receive one for your entire life.
- Indexation at either a fixed percentage or Consumer Price Index (CPI-linked) income payments – choose to have your annuity increase each year by a percentage, or in line with inflation.
- Income payment frequency – you can receive payments monthly, quarterly, half-yearly or yearly.
- Investing with super or non-super money.
- Having some or all of your lump sum returned at the end of the term.
- Being able to withdraw funds from your annuity at any time .
- Nominating a reversionary (where available) – so if you pass away before your annuity finishes, your spouse or dependant could receive the annuity instead.
- Nominating a beneficiary – so if you pass away, someone you choose will receive the remaining money in your annuity or a guaranteed amount.
But annuities have drawbacks, too. There is a chance that your income payments may not keep up with your income needs, for example – and if you choose a fixed term annuity there is a risk that you will outlive the term.
It’s also important to know you may lose some of your initial investment if you make an early withdrawal.
What’s the difference between an annuity and an account-based pension?
With an account-based pension (also called an allocated pension) you use your super money to provide your pension, which the trustee of your super fund invests on your behalf.
You’ll receive a regular income but it’s not guaranteed to last for a set period. It’s available for as long as you have money in your account.
Unlike an annuity, the balance of your account-based pension will go up or down depending on how your investments perform, and how much money you withdraw.
What do I do next?
To find out more about guaranteed annuities and how they could work for you, speak to your financial adviser if you have one, or use our find an adviser service to locate one near you. They’ll review your situation and help you find a solution that suits your life stage, your financial goals and risk appetite.
What’s next?
Account-based pensions
Learn how they work, how you can start one, and the benefits of setting one up.
Account-based pensions
Learn how they work, how you can start one, and the benefits of setting one up.
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Quickly and easily estimate how much super you may have in retirement and how much you may need.
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Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (AIL) is the trustee of the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557 and issuer of FirstChoice range of super and pension products. Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL) is the responsible entity and issuer of products made available under FirstChoice Investments and FirstChoice Wholesale Investments.
Information on this webpage is provided by AIL and CFSIL. It may include general advice but does not consider your individual objectives, financial situation, needs or tax circumstances. You can find the target market determinations (TMD) for our financial products at https://www.cfs.com.au/tmd which include a description of who a financial product might suit. You should read the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. You can get the PDS and FSG at www.cfs.com.au or by calling us on 13 13 36.
Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (AIL) is the trustee of the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557 and issuer of FirstChoice range of super and pension products. Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL) is the responsible entity and issuer of products made available under FirstChoice Investments and FirstChoice Wholesale Investments.
Information on this webpage is provided by AIL and CFSIL. It may include general advice but does not consider your individual objectives, financial situation, needs or tax circumstances. You can find the target market determinations (TMD) for our financial products at https://www.cfs.com.au/tmd which include a description of who a financial product might suit. You should read the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. You can get the PDS and FSG at www.cfs.com.au or by calling us on 13 13 36.