3 top pieces of superannuation advice for volatile markets

When financial markets are volatile, or you’re unsure of what the future may hold it can be tempting to make changes to your super to sure up your retirement plans. But before you make any quick decisions, take a look at our three top pieces of advice when dealing with super in unsteady markets:

1.     Review your investments

To get the most out of your super investments it’s important to understand what you have. Speak to your super fund or financial adviser and find out what your investment allocation is, and then do a bit of research to understand the quality of those investments (are the companies making money, are they large, small, are they currently paying dividends?)

Reviewing what you have will help you understand where your super stands in relation to current market conditions. What the headlines say – e.g. ‘share market down 10%’ – shouldn’t necessarily mean that your super is down 10% because it should be diversified, so understanding your fund contents is key to formulating a plan to mitigate the impacts of the market.

2.     Stick to your plan

If you worked with a financial adviser or your super fund to put together a quality plan that was working well for you when market conditions were stable, stormy periods are certainly not the time to change course. Timing the market (an investment strategy involving moving in and out of the market based on future predictions) is a dangerous approach. Rather than making quick decisions when the market shifts, you’re better off taking stock of what’s happening, reviewing your situation and monitoring the market.

3.     Consider taking advantage of new opportunities with a long-term focus

Think ‘sticking to the plan’ means you can’t change your super investments or approach, ever? Think again! While it’s important to formulate a strategy and stick with it, this doesn’t mean you shouldn’t look for opportunities and take advantage of them when the time is right. This might mean you move 5% of your super from a defensive allocation to a growth asset when you can buy it at a cheaper price, or reduce your cash allocation if it’s generating a lower return. While volatility in financial markets means you shouldn’t make rash decisions, it can also create circumstances that didn’t exist before, so take advantage if these opportunities align with your long-term plans.

As always, Financial Edge Group are here if you’re ever in need of advice on your personal situation, so don’t hesitate to reach out for a chat.