The last 12 months have been a wild ride in financial markets. We have seen the blow-up of sub-prime, have experienced insanely volatile share markets, seen oil prices reach new heights, the emergence of widespread food shortages and a number of other significant and nasty events. The thing that I want to talk about today, though, is the effect that all of this has had on superannuation -” potentially one of your bigger assets (but often forgotten about) and things you might do from here to improve.
First off, if you have a number of years to go before retirement the chances are that your superannuation fund is mainly invested in shares. That assumes that you have gotten good advice about the value of having growth assets but perhaps not such good advice that you didn’t move all or part to cash as bells started clanging in mid 2008. If you don’t have an active adviser you most certainly will have been a bunny in the headlights over the last 12 months riding the share market roller coaster the whole way down (forgive the mixed metaphors -” it has been a long year). At any rate, the chances are that your superannuation fund may have shed anywhere between 10-15% in value in that time. This is not such a big deal if you have little in super but quite painful for those who do (or shall I say did?). Whether or not you have a lot in super, it is widely believed that the next decade is going to be a challenging one for investors so if you haven’t already, now might be a good time to get serious with your super.
Strategically, it will be important to pay attention to what you are doing and move with the times -” complacency is a luxury of the past. If you’re a long term investor then you’ll want to be in growth assets generally but should be prepared to go to cash when markets are uncertain. All that said, nobody has a crystal ball (except for the lady at the Easter Show) so get good advice. Also, you may want to start thinking about global opportunities and specifically themes and trends (eg China, India, renewable energy, oil, etc). We’ve had a great run in Australia and are a good investment bet and should always have a place in a growth portfolio but it’s a big world out there.
So, my short and sharp action recommendations from here:
1. Freak out (only joking!)
1. Talk to a properly qualified financial planner about your superannuation fund (and any other financial issues in your life for that matter). You will probably learn a few things and most advisers don’t charge for initial meetings.
2. Consider your time frames, goals and your appetite for risk.
3. Consider a fund that can provide you with access to a wide range of investment options over different asset classes. That will enable you and your adviser to move your monies around as markets change (time to break out the crystal ball).
4. Look for advisers who are remunerated on a performance basis. They have a lot of incentive to manage your funds well and earn you heaps of money.
The nurse has come to take me to my padded room now so Bon Voyage until next month and good luck in the markets.
Disclaimer: This is general information only and is not intended to provide advice to particular investors, or take into account an individual’s investment objectives, circumstances or needs for investment. Investors should first consult Trillium Wealth Management Pty Ltd