Everyone’s situation is unique. For most people who are not likely to access their super for many years, doing nothing is an investment strategy in itself. That might sound like you are ignoring the problem because at a time like this many of us feel like we need to take action. But when investment markets fall, people often lose more money by making decisions at the wrong time.
Investment markets always have periods where values go up and down. The Global Financial Crisis (GFC), ten years ago, is the most recent example of a large “downturn” or “correction”. Throughout history investment markets have always recovered and risen to levels higher than before these periods of loss. Individual companies or investments do not always recover, but the overall share and property markets do.
So, switching your super money between investments now to avoid losing more might mean you miss out on the gains when those investments pick up and rise in value.
Changing their investments away from more volatile investments, like shares, after the value had already gone down and missing the benefit of that value going back up would have lost thousands of dollars which can never be recovered.
The below chart shows examples of what could have happened to a person’s super depending on the different decisions they might have made during the GFC.
Source: Frontier Advisors, SuperRatings. The analysis is based on the returns during and after the GFC and assumes an average member with a starting balance of $50,000 and SG contributions invested in the median balanced/cash fund.