Superannuation as a long-term investment

The road to retirement is a long-term process that lasts a working lifetime.

Choosing how to invest your super is a decision that comes down to your own circumstances and appetite for taking risks. As a long-term investment, your super will be exposed to different market cycles and risks.

Putting your money into an investment option that is exposed to growth assets could be a great way to maximise your super’s potential. In some years, investments may go downwards, especially if the share market isn’t doing so well. It might be hard to look at the reduced value of the portfolio in some year-end reports. But it is important to consider superannuation as an investment, they perform similar to funds outside of super. And therefore, market volatility will impact superannuation savings, sometimes leaving us feeling a little uncomfortable.

Just like when making decisions with a share or managed fund investment, it is important that we do not ‘sell our way out’ of a market during a downturn and instead seek appropriate advice so you can make well-informed financial decisions.

Choose growth

Most super funds offer a selection of options for your portfolio.

If you are still young and a long way from retirement, a higher growth option may be more suitable. As you approach the retirement age and have less time to recover from a market downturn, a portion of a portfolio’s assets may be more appropriately invested in assets that are less volatile.

In a self-managed super fund (SMSF), your decisions are bigger than just choosing a risk profile and matching investment options. As a trustee of the fund, you have control over investment decisions such as whether to invest in individual shares, managed funds, property and other assets. With control comes the responsibility of research, analysis and making good financial decisions.

Investment values may go up and down

For superannuation funds that are invested in shares and managed funds, markets are always changing. Markets can go up and down and we cannot guarantee the performance or returns of any investment.

Share prices are influenced by many factors and it’s impossible for an investor to predict market movements. Accepting that super is a long-term investment will help you resist the temptation to sell when the market is down. Always remember, what goes down may go up again.

For superannuation funds invested in direct property, it is important not to be fooled by what appears to be its steady reported value. Property prices move too. The difference is, the property isn’t valued as often. So, we don’t tend to see the daily price movement of a residential or commercial property.

Cost of continuous trading

With great control comes great responsibility. With the ability to control investment decisions, the trustees should consider if they will be making investment or speculation decisions. Investment decisions will consider what is best long-term. Speculation decisions are generally based on short-term actions and may be reactive at times.

Speculating in shares can be a costly exercise. The cost of continuously selling and buying shares is increased broker costs, time out of the market and the risk of missing income payments. It has the potential to drain your fragile short-term capital gains if the share market moves unexpectedly.

Also, consider the cost of time spent trying to anticipate market movements. If you’re an SMSF holder, you could dedicate hours studying shares and the market − selling, buying and analysing your transactions. It’s time you could spend on other activities if you are willing to choose good quality long-term income paying investments (with the help of a financial planner) and understand how the market behaves over the long-term. Arming you to make well-informed financial decisions that stand the test of time.

Sit tight and listen to advice

Your lifestyle and your superannuation savings on the day of your retirement is the product of many forces. Focus on the things you have control of (eg what you invest in and for how long). Superannuation is a long-term investment and if your portfolio includes shares, be prepared to ride out the wave of market movements. And where possible, consider taking advantage of the downturns.

Please feel free to book an appointment with a Banks Group superannuation specialist before making investment decisions, including those relating to your superannuation.

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    This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs.

    All services are provided as a Corporate Authorised Representative of BG Wealth Management Pty Ltd, ABN 14 127 520 558, AFSL 496348.


    Financial Planning Services provided as an authorised representative of Count Financial Limited ABN 19 001 974 625 Australian Financial Services Licence Holder Number 227232 a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Count is a Professional Partner of the Financial Planning Association of Australia Limited. Count advisers are authorised representatives of Count.

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