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.
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.