In recent weeks, investment markets around the world have experienced significant volatility as investors try to assess the impact of the coronavirus (COVID-19) outbreak – an event that no-one anticipated for 2020.
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’ve invested in a high growth strategy, or are in a lifestage fund and 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 a lifestage fund and are closer to retiring, or have selected defensive strategies, your exposure to the share market and any risks associated with it may be lower than a high growth strategy.
What this means for you
Our message at this time is to stay calm and don’t panic.
Super is a long-term investment, so while investment markets can be unpredictable over the shorter term, they typically recover over the longer term.
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.
You should consider keeping 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 can fluctuate, depending on a range of factors, including 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.
- 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 may recover from short term movements.
- Stick to your plan – 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 your super is invested in a high-growth investment strategy, your level of risk may be too high.
Remember, we are here to help if you have any questions about your super.
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