Unless all of your super is invested in cash deposits, your super will generally be impacted by the share market and how it performs.
When the share market fluctuates a lot over a short period of time, it’s easy to become excited or nervous. However, it’s important to remember that super is a long-term investment and not a get rich quick plan. Looking at how super funds perform over a number of years, rather than a few weeks, provides a more realistic view of their success.
Q: How does a volatile share market affect super?
Super is generally invested across different investment options – cash, fixed interest, property and shares. As a result, it is likely to be impacted by both Australian and overseas share market activities.
The extent of the exposure depends on the individual investment option and how it’s invested, also known as ‘asset allocation’.
Q: How does my age affect super in a volatile market?
You’ll most likely experience a number of share market cycles over the years. Sometimes your super balance will increase due to market volatility, and at other times it will decrease. But if you start investing early, there is more time for super to recover from the ups and downs of the share market.
Q: Should I be worried when the market fluctuates?
It’s natural to feel worried about super when the share market has dropped in value. However, it’s important to stay calm and remember that if your super is a Lifestage or Balanced investment option then shares are just one part of the asset allocation.
Also don’t forget, super is a long-term investment and over time it should recover from any short-term losses.
Q: What can I do to help protect my super?
It’s hard to predict the future of the share market, but here are ways you can take control of your super today to help secure it for the long-term:
- Speak to a superannuation expert so you can understand where your super is being invested before you make any decisions.
- Consider which investment options suit your life-stage. Remember, if you’re years from retirement you should have time to recover from share market ups and downs.
- Take control of your super and consolidate your accounts to avoid multiple fees.
For information on the range of investment options available visit Essential Super.