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

Share markets around the world have been volatile in recent weeks, 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, or are in a lifestage fund 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 a lifestage fund and are closer to retiring, or may have selected defensive strategies, your exposure to the share market and any risks associated with it may be lower.

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, 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.

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 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 (including MySuper) 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 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.

Below, you’ll find some insights about the market and what is happening right now. This may help you learn about the impact it may have on your super as well as some common questions and answers. And remember, we are here to help if you have any other questions about your super – just call us on 132 135.

Common Questions and Answers

What does it mean for my super?

The value of your super can change daily depending on how your super is invested. The value and performance of each investment option is linked to the underlying asset classes (types of investments e.g. shares, property, fixed interest etc) it invests in and these fluctuate in line with the performance of these assets and the market.

As your super may be invested in the Australian and/or international share markets, you may have experienced a fall in your super balance.

What does it mean for my investments?

Depending on where your super is invested and whether it’s in a high growth strategy, your super is typically invested into one or more asset classes (typically Australian and international shares, property, bonds and cash). You may have experienced a fluctuation in your investment value which reflects the performance of the assets your super is invested in.  Long term growth assets such as shares and property tend to fluctuate and are more volatile in the short term, but over the long term generally produce higher returns than other asset classes.

What should I do?

Super is a long term investment. Changing your asset allocation as a reaction to short term market fluctuations is an important decision and depends on a number of factors including your age, life stage and risk appetite. You should seek advice before changing your long term investment strategy.

If you’re still accumulating super and not intending to retire for a number of years you might want to consider staying with your current investment strategy instead of trying to ‘time the market’. It’s important to remember that the performance of your super often depends on your time in the market which can be disrupted if you try and ‘time the market’ e.g. by switching out of a growth asset class when its performance is falling and switching back in again when markets and unit prices are rising. It’s difficult to pick the top of the market and the bottom, but sticking to your strategy over the long term will likely mean you are better placed to capitalise on growth and minimise losses.

Alternatively, if you’re approaching, or are in, retirement it’s important to stay focused on your long-term investment strategy.

It’s also important to remember the importance of diversification (investing in different asset classes) when determining an appropriate investment strategy. Diversification helps to manage risk and soften the impact in the event of a significant market fall.

Things you should know:

The article was prepared at BT Financial Group, a division of Westpac Banking Corporation ABN 33 007 457 14, AFSL and Australian Credit Licence 233714, and is current as at 19 November 2018.

The information on this page has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. BTPS cannot give tax advice. Any tax considerations outlined in this document are general statements, based on an interpretation of the current tax law, and do not constitute tax advice. Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis.  There will be tax consequences if you breach these caps.  For more detail, speak with a financial adviser or visit the ATO website.

© BT Financial Group - A Division of Westpac Banking Corporation.