Don’t Let Your Retirement Savings Shrink in Disguise

Quick Look

Focus:Why bonds and cash lose value over time — and how real growth assets help protect and grow your wealth

Key Takeaways:

Inflation quietly eats away at cash and bond returns over decades
Growth assets like shares, property and alternatives are essential for real wealth creation
A well-balanced super strategy should include long-term exposure to real assets
Reading Time: ≈ 6 minutes

Introduction

Most Australians want the same thing: a comfortable, independent retirement.

But what many don’t realise is that by being “too safe” — parking money in cash or low-risk bonds — they’re actually exposing themselves to a different risk: slow, silent devaluation.

Over the course of your working life and retirement, inflation steadily reduces what your money can buy. Unless your investments outpace it, you’re going backwards — even if your balance is growing on paper.

Here’s why cash and bonds often fall short over time — and how real, growth-oriented assets can help your retirement savings go the distance.

The Problem with “Safe” Investments

At first glance, cash and bonds seem secure. No volatility, predictable returns, low headline risk.

But they come with a hidden danger: loss of purchasing power.

The Real Cost of Playing It Safe

Inflation adds up over decades. A dollar today will buy less tomorrow — and far less in 20 or 30 years.
Cash often earns below inflation. Most savings accounts and term deposits return less than CPI.
Government bonds can lag too. Even “safe” government bonds can deliver negative real returns when interest rates are low and inflation is high.

Example:
If inflation averages just 3% a year, prices double roughly every 24 years. So, $100,000 sitting in cash today could have the purchasing power of $50,000 or less by the time you retire — unless it’s invested for growth.

“Low-risk” assets often just mean low-growth. Over time, that’s a risk in itself.

What Are Real Growth Assets?

To beat inflation and grow your wealth over time, you need assets that grow in real terms — not just keep up.

These include:

Shares (Equities)

Represent ownership in real companies producing goods and services
Historically one of the best-performing asset classes over decades
Australian and global shares typically deliver 6–9% average annual returns before fees

Most super funds already include shares in their growth or balanced options. But you can choose higher allocations if appropriate for your age and goals.

Property (Residential and Commercial)

Tangible, income-producing, and often appreciates with inflation
Can be held directly (e.g. investment property), via super (SMSFs), or through listed property trusts and ETFs

Property is both a growth and defensive asset — offering long-term capital gains and rental income.

Hard Assets (Gold, Infrastructure, Commodities)

Can’t be printed or inflated away
Often used to hedge against currency debasement and geopolitical risk

Some diversified or alternative super options now include these to enhance long-term resilience.

Alternatives (Private Equity, Venture Capital, Digital Assets)

Less traditional, but can offer strong growth over long periods
May include a small allocation in some advanced or self-managed portfolios

Suitable for experienced investors or SMSFs looking for diversification

The Key: Time in the Market

Growth assets often fluctuate in the short term. But over decades, they tend to outperform everything else. $100,000 invested in a diversified growth fund 20 years ago could be worth $400,000+ today. The same amount in a term deposit may have grown to $180,000 — but lost real value after inflation. Inside Super vs Outside Super Your super is the most tax-effective place to grow wealth for retirement — but you still need to check what it’s invested in. Check your super fund: Is it mostly in bonds or cash? Does it include growth assets like shares, property, or infrastructure? Are you in the right investment option for your age and risk profile? If you’re in your 30s to 50s, a growth or high-growth super option may make more sense If you’re retired or close to retiring, you may still need growth assets — to support a long retirement that could last 25+ years Building Outside Super You can also build long-term wealth through growth assets outside of super, which gives you more control and earlier access. Investment property is a real asset that is hard to dilute while demand continually outstrips supply and has the advantage of leverage with high borrowing ratios Shares Hard assets like gold or Bitcoin can be held directly or through managed funds This adds flexibility, liquidity, and diversification — useful if super rules change or you need funds before retirement.

Common Questions & Misconceptions

“Isn’t cash the safest option?”

Not over the long run. It may protect against short-term shocks, but it rarely beats inflation — and that erodes value year by year.

“Won’t shares crash?”

Yes — from time to time. But that’s just volatility, not permanent loss and history shows they recover and grow faster than any other major asset class over the long term.

“Shouldn’t I reduce risk as I get older?”

You may reduce volatility, but you still need growth — especially with retirement now lasting 20–30 years or more.

“Can I build wealth outside super too?”

Absolutely. In fact, having a mix of super and non-super investments gives you more control, flexibility, and protection. Your home is a major part of this and gives a springboard to further investment over your lifetime.

Conclusion

You don’t build real wealth by avoiding all risk — you build it by understanding the right kinds of risk.

Over time, the biggest danger to your retirement savings isn’t market volatility — it’s low returns that fail to outpace inflation.

By choosing growth-oriented investments inside and outside super, you give your future self the best chance of enjoying financial freedom — not just getting by.

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Disclosure: General information only. Consider your objectives, financial situation and needs, and seek professional advice before acting.

How We Keep It Trustworthy
Every article includes a Review & Fact Check section below — so you know exactly where our facts come from, what’s uncertain, and whether there’s any bias.

Review & Fact Check

1. Fact References

Long-term inflation and CPI impact – Reserve Bank of Australia (rba.gov.au), MoneySmart (moneysmart.gov.au)
Long-term share market returns – ASX/Russell Investments Long-Term Investing Report
Average super returns by option type – Chant West Super Fund Performance Tables
ATO rules on super contributions and SMSFs – Australian Taxation Office (ato.gov.au), updated 1 July 2024

2. Unverified or Inconclusive Items

Future inflation rates and bond returns — based on historical patterns, not guaranteed
Performance examples are illustrative only, not specific to any fund

3. Time Sensitivity

Super caps and tax settings are current as of 1 July 2024
Investment performance data may change with market updates

4. Bias Assessment

This article is neutral, promoting evidence-based, long-term investment thinking. It does not favour any particular product or provider.