Superannuation fund members need to stop worrying over their current account balances and maintain a bigger picture view as the investment is designed as a long-term solution, according to research house SuperRatings.
The advice from SuperRatings comes as members check their account balances to see the effect the sell-off had on their retirement savings and it warned against making decisions based on an emotional reaction to the current environment.
Kirby Rappell, SuperRatings executive director, said super members far away from retirement need to stay invested.
“Knee-jerk changes to your portfolio could have a negative effect on your retirement,” Rappell said.
“Switching to cash will lock in losses and mean you miss out on the upside when the market eventually recovers.
“We suggest members talk to their fund or financial adviser to help ensure any decision is aligned with a long-term strategy.”
The firm reminded investors that for those in the 20 to 40 age bracket, you still had another 30 to 50 years before retirement, and older investors closer to retirement should be in conservative options to mitigate losses in market downturns.
According to estimates from SuperRatings, the median balanced option fell 8.9% in March and was down 10% for the quarter.
The median growth option, which was generally more exposed to shares, fell 12.5% in March and 14.1% over the quarter; the median capital stable option fell only 4.1% in March and 3.8% for the quarter.
For pension returns, the median balanced option fell 10.2% over the quarter, while the median growth option fell 14.4% and the median capital stable option fell 3.8%.
There is a need for Australia’s superannuation funds to simplify their investment menus, according to the firm, given over a third of funds have more than 30 options, of which one or more are “arguably subscale”.
The research house is set to offer research ratings of superannuation funds for the first time amid growing demand from financial advisers.
Treasury is calling for submissions on its draft regulations in relation to the calculation of the proposed Division 296 tax.
Initially intended to offer a “simple, cost-effective” option for Aussies invested in default fund options, a super consultant has weighed in on what the scheme has actually done for members.
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