Watching the stock market nosedive and freaking out about what it’s doing to your super?
Superannuation analyst SuperRatings has a message for you — don’t panic.
“It is putting pressure on super,” said SuperRatings CEO Kirby Rappell.
“But for most people about half their super is exposed to equities [shares], so it isn’t the whole amount.
“And for people closer to retirement, they are often in more conservative options, so they may have 20-30 per cent exposed to equities.
“So it’s just trying to get context at the moment.”
The Young will ride this out
SuperRatings has calculated that the average balanced portfolio has lost 10-12 per cent since the top of the market a month ago.
But Mr Rappell wants us to put that in perspective.
“Since the start of the financial year it’s only probably down a couple of per cent,” he said.
Comparing cash to superannuation since the Global Financial Crisis (GFC), he said super was still a far better place to store your money.
SuperRatings has calculated that $100,000 invested at the bottom of the GFC is up by about 121 per cent.
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By way of comparison, the same amount put into cash at the same time would now probably be worth $90,000.
For working people in their 30s or 40s, Mr Rappell warned against the urge to constantly check your super balance.
And the key to remaining calm is to speak to your superannuation fund to understand how they are going, and their position.
“You don’t have to do this in isolation and live in fear by yourself,” Mr Rappell said.
What if you’re about to retire?
For people who are closer to retirement or are already living off their super there is, understandably, a greater sense of anxiety.
David Bryant, CEO for Wealth and Capital Markets at Australian Unity, said this was a good time for people in that category to look at where else they might be able to get money.
The coronavirus outbreak is expected to cost the Australian economy billions, with the second-order impact to be felt across supply chains, as many factories remain closed in China.
“It’s better that people draw on the things that are available that haven’t been affected, such as term deposits,” he said.
“Make them for shorter periods such as 30 days, rather than 12 months.”
Like Kirby Rappell, Mr Byrant said now was a good time to speak to your superannuation fund about whether you have the best mix of investments for these turbulent times.
“People try and keep their portfolio in balance at all times, and what I would say is — don’t,” he said.
“Be out of balance for three months. Use things like cash, term deposits and fixed interest securities, rather than any listed securities
Can I access my super if I lose my job?
For most of us, we can only access superannuation when we turn 65 or reach preservation age and retire.
But there are some cases where you can access it earlier on compassionate or hardship grounds.
This might include being on welfare payments like Newstart for six months and not being able to meet your living expenses, having a life-threatening illness, or needing money to pay rates to stop you losing your home.
If you think you meet these criteria, speak to your super fund about whether they will allow you access to your retirement money.
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There are also reports the Government is looking at relaxing these rules during the coronavirus epidemic.
This could help plenty of people, including small-business owners and casual employees, get through what will be a very challenging financial time.
Overall, the message is the better informed you are, the more power you have to influence your economic future.
So give your superannuation fund a call.
And for a bit of added comfort, Mr Bryant said that although the current economic situation is bad, the GFC was worse.
Because it happened a decade ago there is a playbook for how to avoid a total economic collapse.
Just don’t check your super balance every day, if you can avoid it.
The information in this article is general in nature and not direct advice. You should speak to your super fund for guidance on your own situation