Superannuation is a long term investment, but that doesn’t stop the emotional response to seeing your investments fall.
A report from The Superannuation Stakeholder Group* outlines the affects of the global crisis on Australian superannuation. The report shows the volatility and market fall over the last 12 months.
We have now experienced nearly 15 months of poor performance and it may stay depressed for some time yet according to most economists. With 20 years since our last bear market, many people have unrealistic expectations of market performance and forget the market cycle includes downturns as well as increases.
Financial markets and superannuation
Superannuation has performed well over the long term. Super has tax advantages and it can be hard to get back into if you leave the system.
Given that most Australians will spend 15 years in retirement, super is still a long term investment for members who are nearing or recently retired as well as for younger members. Over time, the Superannuation Stakeholder Group believes super accounts and income streams will increase in value.
The report recommends thinking carefully before changing investment options in response to the current downturn – trying to time the bottom and rise of the market is risky as recovery can happen quickly. Selling in a down market may mean realising a loss and potentially missing out on the recovery.
Want to know more?
The full report from the Superannuation Stakeholder Group is available free of charge by clicking here . For queries about AvSuper performance and investment strategies, please contact us or ask for an appointment with a financial planner.
* The Superannuation Stakeholder Group consists of the Association of Financial Advisors (AFA), Australian Institute of Superannuation Trustees (AIST), Association of Superannuation Funds of Australia (ASFA), Australian Securities Exchange (ASX), CPA Australia, Financial Planning Association (FPA), Industry Super Network (ISN) and Investment & Financial Services Association (IFSA).