Skip to main content

The markets are down! What’s going to happen to my super? What do I do?



Welcome to 2016!  We’re only 2 weeks in and already the media have been reporting large falls on Australian and Global stock markets.  And they’re right, the Australian stock market (as I write this) is currently sitting at almost the exact levels of 10 years ago.

So what does that mean for your super fund and how can you take advantage of this situation?  Most people have exposure to the stock market through their super funds, particularly if you’re invested in a balanced or growth option within a retail super fund (Sunsuper, Australian Super, AMP the list is almost endless). 

The reality is, the level of the market is only of concern if you need to access your funds. So unless you’re approaching retirement, it’s not really an issue.  Markets will recover, they always do, it’s just a matter of time.  There is however a massive opportunity with market levels so low.  There have only been a handful of times over the past century where markets have been at or below the levels they were 10 years prior.  The clock has been turned back so you can now invest in markets via your super at 2006 prices!  Imagine being able to do that with the new car you’ve been wanting or even a house.

So what can we do?  What do smart investors do?  Well, if you do nothing your super will slowly recover as markets recover, and for some that may be the best thing.  However, depending on your age and investor profile, you can accelerate the recovery through the use of internally geared funds.  You’ll recall my post of December 21 How to get the best out of your Super – Internally Geared Funds. These funds invest in the Australian stock market.  However, they have an internal gearing/leveraging mechanism that amplifies returns (and losses) by approximately 50%. 

So if the market drops 10%, they go down 15% however if it goes up 10% they go up 15%.  Given the current level of markets, much of the downside risk has been removed.  Markets are already significantly down.  Does this mean they won’t drop further?  Of course not, they could very well do that however you’ll never pick the bottom.  The best you can do is recognise that markets are already significantly discounted and they will recover.

Do you simply leave your super as is and be content with mediocre gains, or do you restructure, give consideration to the use of internally geared funds and enjoy accelerated returns in your super as markets recover?  The choice is yours.

At the very least, it’s worth a discussion.  If you have a number of funds, now may be the time to consolidate them all into the one high performing fund. The above may not be for everyone and it’s not to be taken as advice, but for the sake of an hour of your time and a coffee it should be considered.

Andrew O'Brien. FINANCIAL ADVISER. P 07 3852 3025  M 0403 156 625  E andrew@hindsightwealth.com A Suite 4 / 30 Florence Street, Newstead QLD 4006. To view our Privacy Policy, click here.

 Andrew O’Brien and Hindsight Group Pty Ltd t/as Hindsight Wealth Pty Ltd (ABN 88 168 442 528) are Authorised Representatives of Synchron AFS Licence No 243313.”  


Labels:

Comments

Post a Comment

Popular posts from this blog

Don't Wait till you're in your 60's to see a Financial Adviser

Ask most 30-year old’s who their financial planner is and the typical response might be ‘huh?’ After all, financial advisers are for older people with plenty of money to invest, aren’t they? Well, yes, people nearing or in retirement will benefit from sound advice. But so will younger people. With the benefit of having time on their side, and with some help from an adviser, a 30-something can easily establish a wealth creation plan that can deliver a big payoff in the future. Harness compound interest It’s been called the most powerful force in the universe, and compounding returns – earning interest on your interest – can deliver dramatic results. Imagine that, at age 30, you commence a simple savings plan. You contribute $2,000 each year to an investment that delivers an after-tax return of 6% pa. After 30 years you will have contributed a total of $60,000, but your investment will be worth $158,116. The magic of compound interest will have delivered you an effortles...
Post a Comment
Read more

What to do if your job is made redundant.

Being retrenched from your job can be hard to accept. It is the sudden shock that catches most people but try not to take it personally. Redundancy is usually not about your personal performance; it’s the performance of your employer’s business, the industry sector in which you work, or even the global economy. Dealing with the key considerations below can help you take back control of your life and career. Take control Redundancy payment :  Genuine redundancy payments are given special tax treatment, including a tax-free amount related to years of service. Your lump sum payment might be your last pay packet for a while, so draw up a budget. This will help you identify areas where you can economise until you find a new job. Your financial adviser can help you work out the best use for any lump sum you receive. Mortgage :  If you have a home loan, contact your lender immediately. You may be able to adjust payments while you are out of the workforce. Centrelink :...
Post a Comment
Read more
Before you get excited (or not), I don't offer Pet Insurance, however I have received many questions about it.  So I thought I would offer some thoughts to consider for your independent pet insurance research. Australians are a nation of animal lovers.  According to the Australian Companion Animal Council, we have one of the highest incidences of pet - ownership in the world! Dogs and cats are our favourites; around 36% of Australian households own a dog, and 23% own a cat.  We're familiar with the companionship pets bring, and the social interaction they foster, but there are other benefits too: Lowered blood pressure and cholesterol; Increased physical activity; Strengthened immune system and reduced incidence of allergies and Children learn responsibility, empathy and respect. When considering a pet, you expect costs like food, bedding, the annual vet visit and so forth, but there are other costs you may not have thought about. Let's start at t...
Post a Comment
Read more