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UK Brexit: What does it mean for investors and super?

UK Brexit: What does it mean for investors and super?

Australian investors are concerned that the UK’s departure from the EU will have ongoing repercussions for their superannuation portfolios.

The United Kingdom (UK) has voted 52% to leave the European Union (EU) in what has become known as 'Brexit', compared with a vote of 48% to remain.

The move was a surprise, as a majority of analysts believed the vote would be to Remain.

Markets dislike uncertainty and the move in the UK has left investors wondering what happens next.

While the initial market reaction was generally negative, it can be prudent to allow any shocks to subside before making any decisions about your investments. The entire process for the UK to exit will take two years to execute.

It is important to understand that there are a number of scenarios that could eventuate regarding the political, economic and investing landscapes.

The impact for investors

Australian investors are concerned that the UK’s departure from the EU will have ongoing repercussions for their superannuation portfolios.

Your Essential Super balance is visible alongside your other accounts in NetBank and the CommBank app and you might notice some fluctuations as markets move.

When it comes to super, the short-term ups and downs of the market should not cause you to panic or take any rash action.

Super is a long-term investment designed to generate sufficient money for your retirement.

While volatility is always a consideration throughout the entire time you invest in super, investing in a diversified investment portfolio can be a way to help manage this.

Lifestage

The closer you are to retirement, the more focused you might be on investing in a portfolio that has less fluctuations in returns, while if you are younger, growth could be more important for you.

The Lifestage investment option in Essential Super is designed to reflect your age and how close you are to retirement by automatically adjusting your portfolio based on where you are in your financial journey. 

So while an event such as Brexit can impact returns, the ongoing aim of the Lifestage option is to help you achieve the lifestyle you would like in retirement.

Going the distance

The main thing to remember is that super is a long-term investment and strategies often need to change throughout the years you are building it in order to make the most of your current situation and the investing environment.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Past performance is not indicative of future performance. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning Pty Ltd ABN 65 003 900 169 AFSL 231139 a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 (the Bank). Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) is the issuer of interests in Commonwealth Essential Super ABN 56 601 925 435. This information is not financial product advice and does not take into account any person’s individual objectives, financial circumstances or needs. You should read the Product Disclosure Statement (PDS) for Commonwealth Essential Super and consider talking to a financial adviser before deciding whether to acquire or continue to hold this product. Download the PDS (https://www.commbank.com.au/content/dam/commbank/personal/apply-online/download-printed-forms/EssentialSuper_PDS.pdf), collect one from any branch of the Commonwealth Bank or call us on 13 4074 and we’ll post one out to you. Colonial First State is a wholly owned subsidiary of 'the Bank'. The Bank and its subsidiaries do not guarantee the performance of Essential Super or the repayment of capital by Essential Super. An investment in Essential Super is via a superannuation trust and is therefore not an investment in, deposit with or other liability of the Bank or its subsidiaries. An investment in Essential Super is subject to risk, loss of income and capital invested.