Older Australians who are closer to retirement will be the hardest hit from the latest share market rout with around 4 per cent or $8000 wiped off the value of the average balanced super fund.
Despite the losses, which are small in comparison to the estimated $120 million loss in Australian shares since January 1, investment experts are urging people not to panic and to take a long term view.
So, what can you do?
- Look at what’s working: People who are fairing the best right now have the lowest share market exposure.
- The reality: Most Australians are in a balanced super fund which means they have high share market exposure at around 60% to 70% in growth assets. Indeed the people with the most to lose are those closest to retirement who have an average fund balance of $200,000, according to research firm SuperRatings.
- Get a grip. If you are young or not looking to retire anytime soon, you can arguably afford to take a little more risk with your fund because time is on your side and volatility is just part of the long-term story of investing in shares.
- Age matters. If you are close to retirement age, look at what type of fund/strategy you are in. Is it risky or more conservative fund. Indeed it is important to be engaged with your strategy regardless of your age.
- Seek financial advice. If you are really worried about what to do next then seek advice. Remember very few people have ever been successful with timing the market. Indeed many people who switched to cash during the 2008 financial crisis did so at the wrong time.
SuperRatings’s latest data shows that the median balanced option super fund recorded a 0.2% gain in December, taking the 2015 calendar year return to 5.6%.
While this sits well below the 16.3% and 8.1% returns seen in 2013 and 2014, it is a solid and reflects diversification in international shares as well as the lower Australian dollar which helped to cushion the losses.
Overall the differences between this year and last show that what goes up can also go down.
