Kevin’s Two Cents: How Does The Current Market Volatility Affect Your Super?
We chat to our CIO/co-founder, Kevin Hua on how to weather financial storms.
Written by Kevin Hua Co-founder & Chief Investment Officer
This information does not take into account your personal objectives, financial situation or needs. You should consider if the relevant investment is appropriate having regard to your own objectives, financial situation and needs.
It’s a news heavy time right now. There’s talk of inflation, supply chain issues, and of course possible world war 3, the phrase ‘unprecedented times’ comes to mind.
Q1: How does market volatility affect members super?
A: Market fluctuations will impact financial returns for many investment products including one’s super. However, we must remind ourselves that super is a long-term asset for members and that volatility and market fluctuations are usually short term in nature.
Super is a long-term investment asset aimed at creating a suitable nest egg for retirement. Year-to-year, financial returns may fluctuate but over the long-term, members and super managers should be focused on long-term returns that can exceed inflation and hopefully exceed the broader market.
Q2: What does this mean for the average super portfolio? Indeed, should we be concerned about super?
A: The average super portfolio has seen significant volatility in recent months and returns have been impacted accordingly. However, I don’t think we should be necessarily concerned about super, particularly if you are younger and many decades left for super to reach its financial goals for you as a member.
Q3: Is now a good time to review my superannuation investment style (conservative, balanced etc)?
A: It is always a good time to review your superannuation investment style and make sure it remains suitable. However, this should be more dictated by your own personal financial circumstances rather than the current state of financial markets.
Q4: What action do I need to take differently if I am just starting to build my super, versus someone who is about to retire?
A: Yes, generally speaking, but each person’s individual circumstances will differ as well.
Generally, a younger person at the beginning of their building their super balance will have different considerations who is close to retirement and needs access to the super balance in the near term.
Q5: I’m hearing a lot about Value taking over Growth stocks as the flavour of the moment. How do you feel about that?
A: There should be room in a superannuation portfolio for both value and growth stocks as well as other asset classes.
A superannuation portfolio should be well diversified across asset classes such as equities, fixed income and alternative asset classes such as real estate, private equity and credit.