The topic of investing always generates a buzz. After all, who doesn’t wish they could use their existing money to make more money, right? So, have you ever wondered how investing and superannuation work together? This article will offer you insights on the investing basics by revealing the truths of investing for super.
SUPER IS NOT SOME SET-AND-FORGET SAVINGS ACCOUNT
Super is a tax-effective way of saving, but unlike a savings account, it is not a set-and-forget scheme. Superannuation has a strong reputation as a secure and well-managed investment so, for the most part, you can rest easy that your super is in safe hands. However, it is worth monitoring your super to ensure that you get what you are entitled to. Understanding your fund’s investment strategy and whether it aligns with your circumstances is just one way to maintain oversight of super.
SWITCHING YOUR INVESTMENT DURING MARKET MOVEMENTS CAN PUT YOU AT RISK
Super is for the long-term and comprises investments that are designed to help you ride out short-term losses as they frow retirement savings. According to findings on member behaviour, investors may be better off remaining invested when markets are volatile. Reacting to events that have already occurred can mean they lock in losses or miss out on gains when markets stabilise, as well as increase the risks associated with switching between growth and conservative assets in an effort to “time” conditions – potentially impacting the long-term value of one’s super fund.
BUT WHILE SUPER IS A LONG TERM, YOU SHOULD STILL REVIEW (AND ADJUST) YOUR PORTFOLIO OVER TIME
It may be worthwhile reviewing your risk tolerance and asset allocation to align your portfolio with the needs of your current life stage. It’s like going to the doctor for a checkup or getting your car’s oil changed. For example, the needs of a working professional versus a retiree could differ, as may the composition of their portfolios – where one has more capacity for riskier growth assets, while the other may prefer more defensive holdings.
YOU SHOULDN’T PUT ALL YOUR EGGS IN ONE BASKET
In an ever-changing investment environment, the diversification of assets in your portfolio could balance loss in one area with growth in another to generate your overall returns. Different asset classes go up and down at different times, so taking a diversified approach to your investments can help a lot during periods of volatility. A well-diversified portfolio should lead to smoother, more consistent returns.
CONSIDER ALL THE FACTS AND SEEK HELP
Identifying risks and opportunities can be tricky and time-consuming. That’s why many investors harness the knowledge of investment professionals who know where – and how – to look.
YOU DON’T HAVE TO DO IT ALL YOURSELF
We have helped a lot of clients with their superannuation, investment and retirement needs. We work alongside our clients to skillfully identify and action the best possible investment opportunities for them. So, whenever you feel the need of knowing which suits you best, help is at hand. CONTACT US NOW!