One of the biggest decisions you can make about your superannuation is the investment option you choose.

Most funds offer a menu.

Two of the most popular are “balanced” and “high growth.” The choice sounds arbitrary, but over the decades, making the right choice can be worth a fortune.

Let’s compare them.

How the two options differ

A balanced option spreads your money across shares, property, bonds, and cash.

A balanced portfolio typically holds around 60% to 76% in growth assets, while the rest sits in more defensive assets.

A high growth option tilts far harder towards shares and often holds 85% or more in growth assets.

That means bigger swings, but higher expected returns over time.

What the returns tell us about your superannuation

History gives us a useful guide.

Over the 10 years to 30 June 2026, AustralianSuper’s balanced option returned an average of 8.47% a year.

Its high growth option returned 9.64% a year over the same period.

That difference may look small, but it is anything but.

On a large balance compounded over decades, roughly one extra percent a year adds up to serious money.

However, the trade-off is volatility.

High growth options fall harder when markets wobble, and if investors panic and switch at the bottom, they lock in the loss.

Discipline is the price of those higher returns.

Which option suits you?

The answer depends on your time horizon. If retirement is 20 years away, you can usually ride out the bumps, and as such, high growth may suit you.

If you are close to retirement, a steep fall could hurt.

A more balanced mix may help you sleep at night. Many people shift towards safer assets as they near retirement.

On top of that, your risk tolerance matters just as much as your age. The best strategy is the one you can actually stick with.

Three ASX funds that lean growth

Some investors also hold ASX-listed funds directly, inside or alongside their superannuation. Three growth-tilted ETFs stand out.

The Vanguard Australian Shares Index ETF (ASX: VAS) tracks the biggest ASX companies, and the iShares Core S&P/ASX 200 ETF (ASX: IOZ) offers similar broad local exposure. By contrast, the BetaShares Nasdaq 100 ETF (ASX: NDQ) adds global technology heavyweights.

Together, they show what a growth tilt can look like. Just remember that more growth means more volatility.

Foolish Takeaway for your superannuation

There is no single right answer for your superannuation.

High growth has historically delivered more over the long run. Balanced offers a smoother ride.

Match the option to your timeline and your temperament. Then leave it alone and let compounding do the work.

The post Should I target high growth or balanced strategies for my superannuation? appeared first on The Motley Fool Australia.

More reading

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• Why it’s vital for investors to look to international shares for growth: Expert 
• Own Vanguard ASX ETFs? It’s dividend payday!
• Own NDQ, GAME, or other Betashares ASX ETFs? It’s pay day for you!
• 3 amazing ASX ETFs I’d buy this month

Motley Fool contributor Mark Verhoeven has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Superannuation is a very effective tool for Australian investors to generate returns at a lower tax rate.

Pleasingly, superannuation has a lower tax rate than many individuals, trusts and companies. The way that superannuation works, and the nature of how we access the money, means it’s very easy to invest for the long term inside the super system.

In my view, being paid passive income is one of the best elements of owning shares. Receiving money into our bank account every year for no effort sounds good to me.

How does superannuation play into passive income? Investors lose less of the passive income payments to tax.

Superannuation looks comparatively much more appealing because if a full-time working Aussie receives passive income in their own name, they could lose a third (or more) of that passive income to tax, significantly reducing the effectiveness of the passive income return.

In my opinion, superannuation is therefore a more appealing place to invest because of the lower tax rate in the accumulation phase of life, compared to an individual’s tax rate if they’re a full-time earner.

In retirement, a person’s superannuation tax rate could be 0%. You can’t get any better than that.

Of course, each Australia’s tax position is different, so I’ll just look at targeting a particular income goal from here and ignore the tax rates.

How much is needed in superannuation for $100,000 of annual passive income?

Receiving $100,000 in dividends each year sounds excellent to me. I’m definitely a long way from that target, but I’d love to receive that much in dividends each year.

Australians need to consider what types of investments they want to own and what size dividend yield comes with those investments.

I think ASX shares are the best choice for passive income. The attached franking credits are an excellent bonus.

How much is needed to earn $100,000 annually depends on the dividend yield of the portfolio.

For example, a portfolio with a 6% dividend yield would require $1.67 million. Meanwhile, a 4% dividend yield would require a $2.5 million portfolio.

As you can see, different dividend yields require different-sized portfolios to reach the target. Therefore, the numbers are heavily influenced by what ASX shares superannuation investors choose.

The types of ASX dividend shares I’d buy

There are various options on the ASX that can provide good yields to investors. Aussies could choose quality companies, real estate investment trusts (REITs) or listed investment companies (LICs).

Some of my favourite ideas for dividend growth and a solid starting yield include Wesfarmers Ltd (ASX: WES), Telstra Group Ltd (ASX: TLS), Universal Store Holdings Ltd (ASX: UNI), Lovisa Holdings Ltd (ASX: LOV), Medibank Private Ltd (ASX: MPL), Propel Funeral Partners Ltd (ASX: PFP) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

On the commercial property side of things, I like names such as Rural Funds Group (ASX: RFF), Dexus Industria REIT (ASX: DXI), Centuria Industrial REIT (ASX: CIP) and Charter Hall Long WALE REIT (ASX: CLW).

Finally, the LICs that I really like include MFF Capital Investments Ltd (ASX: MFF), L1 Long Short Fund Ltd (ASX: LSF), Future Generation Global Ltd (ASX: FGG) and Future Generation Australia Ltd (ASX: FGX).

These aren’t the only attractive ASX dividend shares for superannuation investors, but I think they’re an excellent starting point.

The post How much is needed in superannuation to target a $100,000 annual passive income? appeared first on The Motley Fool Australia.

More reading

• $1,000 buys 584 shares in an incredibly reliable ASX dividend stock
• 2 ASX dividend shares with yields above 7%
• Should you buy, hold, or sell Wesfarmers shares?
• Here are the top 10 ASX 200 shares today
• How much do I need in my superannuation to earn an annual $60,000 passive income?

Motley Fool contributor Tristan Harrison has positions in Future Generation Australia, Future Generation Global, L1 Long Short Fund, Mff Capital Investments, Propel Funeral Partners, Rural Funds Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Mff Capital Investments, Rural Funds Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Lovisa, Universal Store, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are very few ASX dividend stocks I’d view as a more reliable option for passive income than Future Generation Global Ltd (ASX: FGG).

When I think about which businesses I’d want to own for dividends, I’d want to choose names that can provide both a good dividend yield and a rising payout.

If an investor wants passive income, then they’ll probably be looking for a good yield upfront. But, growth of the payout is also important to help offset inflation and hopefully provide steadily rising dividends to make our bank accounts increasingly well-off.

Future Generation Global is a listed investment company (LIC) that offers numerous positives. Let’s look at the positives and why I’d buy it with $1,000 (or more).

Philanthropic efforts

The business is not like many other ASX dividend stocks. It’s a LIC which provides investors exposure to a portfolio of funds of different fund managers.

All of those fund managers work for free so that Future Generation Global can donate 1% of its net assets each year to charities focused on youth mental health.

Some of the charities that are supported by Future Generation Global include BackTrack, Bighart, Life4Life, Mind Blank, Prevention United, Project Rockit, Reachout, Smiling Mind and Youth Opportunities.

I think it’s a really great set-up for both investors and the charity contributions.

Diversification

Future Generation Global can provide investors with excellent diversification because it’s invested in the funds of 15 different fund managers.

There are more than 3,700 different underlying shares in the ASX dividend stock’s portfolio, so Future Generation Global actually offers enormous diversification across North America, the UK, Europe, Asia and so on.

Its money is spread across a number of fund managers including Antipodes, Yarra Capital Management, Munro, WCM Investment Management, GCQ, Ellerston Capital, Vinva, Langdon, Plato and Paradice.

Dividend yield

The ASX dividend stock recently announced its FY26 interim dividend for shareholders – 4.2 cents per share and provided guidance that the final dividend per share for FY26 will be another 4.2 cents per share.

That brings the potential FY26 annual payout to 8.4 cents per share. At the current Future Generation Global share price, that translates into a possible grossed-up dividend yield of 7%, including franking credits, at the time of writing.

That would generate around $70 of grossed-up dividend income with a $1,000 investment for FY26 by buying 584 shares.

That’s more appealing to me than a term deposit, particularly when it’s combined with its rising dividend.

Rising payouts

Future Generation Global has increased its annual payout each year since FY19, so investors have already had several years of dividend growth. It also has a profit reserve of 66.4 cents per share, which suggests it can fund close to eight years of dividends based on the FY26 dividend level.

Pleasingly, the guidance the business has provided for FY26 translates into year-over-year growth of 5%. That’s a solid rate of growth, in my opinion.

But, it’s not the only ASX share I’d buy with $1,000. There are a few other compelling opportunities.

The post $1,000 buys 584 shares in an incredibly reliable ASX dividend stock appeared first on The Motley Fool Australia.

More reading

• How much is needed in superannuation to target a $100,000 annual passive income?
• How to invest $15,000 for passive income in retirement
• How much superannuation is needed to target a $100,000 annual passive income?
• How much is needed in superannuation to target a $70,000 annual passive income?
• How much is needed in superannuation to target $60,000 in annual passive income?

Motley Fool contributor Tristan Harrison has positions in Future Generation Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.