There's been a fair bit reported in the media about the recent dip in the sharemarket, and you may be wondering how it effects your super investment. Here we answer some of the more frequently asked questions.
Why has there been such movement in performance returns?
The share market is down which means that due to higher market volatility, investment returns have taken a hit. Various factors have contributed to the turbulence, one of these being the volatility in global markets and another is the possibility of a recession in the US.
Remember that markets go up and down over time and super is a long term investment so it's important not to pay too much attention to short term market movements. There's probably plenty of time for markets to come back up again before you need to dip into your super for retirement. However, it's always a good idea to get professional financial advice if you are nearing retirement or want more advice.
Some things to keep in mind
When returns drop after experiencing really exceptional returns for a period of time, its hard not to panic, some may even consider switching in an attempt to chase better returns. Stop ...and consider the following
- Super is a long term investment: If you're in an investment option with a greater percentage of growth assets than income assets, (such as our default fund the Living Large fund) the aim is to achieve a greater return over the longer term. However short term fluctuations are expected with this type of strategy and if you are prepared to weather the volatility, such as the recent market conditions have produced, shares should sail back on up over time. This is what history has shown.
- Risk management: The beauty of max's indexing strategy is that you're not putting all your eggs in the one basket or committing to risky stocks. We invest your money across a group of businesses selected to be indicative of the market (in Australia it's called the ASX 300) so the performance of your investment tracks the market returns of this representative sample.
- Money is in reliable hands: They're one of the best - Barclays Global Investors. They manage billions of dollars, and have won world wide acclaim. In Australia they were awarded S & P Fund Manager of the Year 2006.
Chasing short term performance in an attempt to achieve greater returns can be risky, and may cost you in the long term. Remember that this isn't the first time markets have experienced this sort of activity. History tells us that when there is a big dip in shares the market eventually recovers to new highs.
