Steady as She Goes - Market Update

Wednesday, February 13, 2019

You might have noticed a fall in your super balance in recent months and are wondering what the cause of this is.

Share markets around the world have been volatile since September last year, so if your super is invested in the Australian and/or international share markets, it’s likely you would have been affected by this.

How much of your super is invested in shares is also important. For example, if you’re invested in a high growth strategy and are not looking to retire any time soon, it’s likely you’ll have more of your super invested in shares. If you’re invested in more conservative strategy, your exposure to the share market and any risks associated with it may be lower.

The best strategy at this time is to stay calm and don’t panic as we are already seeing early signs of growth in markets at the beginning of 2019.  No one has a crystal ball to clearly see how this year will play out and there are sure to be some challenges for markets along the way.  Super is a long term investment, so while investment markets can be unpredictable over the shorter term, over the longer term they typically recover. 

If you’re approaching, or are in, retirement it’s still important to stay focused on your long term investment strategy and consider all your options before making any significant changes.

Keep the following things in mind when looking at your super and what’s happening in global markets:

Stay calm: Over time, the value of your super investment will go up and down, depending on market conditions. Reacting to short term market conditions may mean you’re missing out on subsequent market improvements.

Di­ver­si­fi­ca­tion: Most members in super funds are invested in a variety of asset classes, not just the share market. Different asset classes perform differently over time which helps to even out the highs and lows of market volatility in a particular asset class. If you are drawing an income from your superannuation in retirement it makes sense to only use cash to fund your income stream when markets have fallen.  Avoid being forced to sell shares when markets are low, as once they are sold, you will not benefit from the future gains they will inevitably make

Long term investing: Super is a long term investment so many investment objectives focus on a 10 year period. It is expected that there will be periods of volatility but over the longer term markets typically recover from short term movements.

Stick to your plan: It makes sense to understand how much risk you’re comfortable with taking when it comes to how your super is invested and build this into your financial plan. You may want to consider regularly reviewing your financial plan to make sure it still reflects your current needs. For instance, if you’re moving towards retirement and have your super invested in a high growth investment strategy, your level of risk may be too high.

Seek advice: If you need assistance with determining the level of risk you’re comfortable with taking on, or to determine if your financial plan is still meeting your needs, seek the advice of a financial planner. With a well formulated plan you are better placed to withstand periods of volatility.

For more Information contact Mark Digby at Maher Digby Securities Pty  Ltd - Financial Advisers – AFSL No. 230559 Ph: 07 5441 1266 . This document was prepared without taking into account any person’s particular objectives, financial situation or needs. It is not guaranteed as accurate or complete and should not be relied upon as such.  Maher Digby Securities does not accept any responsibility for the opinions, comments, forward looking statements, and analysis contained in this document, all of which are intended to be of a general nature. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend consulting a financial advisor