25 Sep 2011
The Global Financial Crisis was a tough time for investors and we are continuing to feel its affects now. Right now there is increased uncertainty and we are experiencing another period of volatility and unfavourable market conditions.
Turn on the news or pick up a newspaper and the headlines all appear to be the same – share markets around the world are in free-fall wiping off millions and billions of dollars each day. Various news programs and financial commentators are predicting a return to doom and gloom with terms like ‘GFC Mark II’, ‘double-dip recessions’ and ‘sovereign debt crisis turned bankruptcy’ being used on a daily basis.
All of this negativity does nothing for investor confidence and can make the stock market feel like a scary place to have one’s super invested.
What does all of this mean for your super?
Although it can be hard, it’s important for super investors to take the emotion out of investing. History shows that stock markets have risen and fallen, sometimes quite dramatically, over the short-term. All superannuation members should remember that super is a long-term investment. Of course no-one likes to think they’re losing money, but despite all the doom and gloom in the markets at the moment, the only time you actually lose money is if you take your money out of super (via a benefit withdrawal) or you switch investment options. Other losses are just on paper and as history also shows, expected to be regained over time. Although a hard thing to do, sometimes doing nothing can be better that doing something.
If you’re unsure or uncomfortable with what’s happening to your super, you should strongly consider speaking to a financial planner about your options. Please contact us if you would like to speak to our financial planner.*
What about me? I’m about to retire – my losses are real
The only time your losses are realised are if you cash out and take your benefit as a lump sum. You do have other options when you retire that allow you to keep your money invested in the super system. Let’s say you’re 65 and want to retire next month. Instead of taking your benefit as a lump sum and permanently crystallising your losses, you can transfer your Prime Super benefit to a Prime Super retirement income stream and receive regular payments from it in retirement whilst the bulk of your money remains invested, and can benefit at a time that markets recover. You may lose some value if you change investment options when you open your income stream, but if you live to 80, you’ll have another 15 years of investment to recover and participate in any gains the market may contribute over that time.
Of course everyone’s situation is different so it’s important to speak to a financial planner before making an important investment decision.
Contact your local representative
The advice contained on the Prime Super website does not take into account your particular objectives, needs or financial situation. Before making a decision regarding the acquisition or disposal of a financial product, you should assess whether the advice is appropriate to your objectives, needs or financial situation. You may wish to make this assessment yourself or seek the help of an adviser. Prime Super takes no responsibility for you acting on the information provided. Any decision that you make is at your own risk. Before acquiring a financial product you should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product.
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