Investing super: what not to do

Your super is one of the most important investments you’ll ever have. Think of it as an investment in your future. And like all investments, the main objective is to grow it over time. With this in mind, let’s look at a few things not to do in relation to investing your super …

Don’t … ignore your investor profile

When we talk about ‘investor profile’ we’re talking about your preferences for investing, which in turn should be a key part of determining which investment options best suit you.

Two factors to take into account when working out your investor profile include:

  • your timeframe, which is how long your money is invested, and can be short, medium or long-term. For many of us, our super is invested for a long time (between 20 and 40 years) – with such a long timeframe, we can afford to take on a little more risk than someone who is closer to retirement because there’s time to ride out any market downturns. In other words, the longer your timeframe, the more you can invest in growth assets which have historically delivered better returns over time. 
  • your appetite for risk, which determines how your super is invested. Risk and return go hand in hand: generally, the greater the potential return, the higher the risk. Remember that the further away you are from retirement, the more risk you can comfortably take on because there’s plenty of time to make up any losses and take advantage of the inevitable market upturns.

Understanding your investor profile is key to making the correct investment choices for your super. Ignore it, and you may end up investing in an option which doesn’t provide the returns you want.

If you’re unsure about your investor profile, speak with one of our financial planners. They can help you work out the best way to invest your super, based on your situation and goals. Call Member Services on 1800 757 607 to book a free callback from a planner.

Don’t … panic when markets are volatile

This year has been up there in terms of market volatility. COVID-19 has had a huge impact on global and local markets, and unfortunately super was not immune to these market fluctuations.

The biggest favour you can do for yourself when markets are volatile is to hold firm with your investment strategy and not panic when you see markets going down. That’s because they will go back up.

Remember that volatility – even extreme volatility – is part and parcel of the investment cycle. Historically, sharemarkets have always rebounded and, over time, growth assets have delivered higher returns than defensive investments (such as cash).

Don’t … switch too often 

The fact is, history shows you’re likely to be worse off if you switch investments too often.

Let’s face it: the main reason most people switch investments is when markets are volatile and there is the fear that one’s investments will go down. 

This is evidenced by the roller-coaster ride we’ve recently witnessed with the markets during COVID-19: markets dropped and many investors rushed to switch into more conservative investment options, but as quickly as the markets dropped, they shot back up - leaving these people worse off and having locked in losses.

When markets are volatile, it’s always tempting to switch from a growth-oriented strategy to a more conservative strategy. However, by doing this, you lock in your losses and chances are you will miss the gains on the way back up. In other words, hold fast with your long-term investment plan and stay invested.

Don’t … hesitate to get finance advice 

Getting advice from a financial planner now can really set you up for the future. And because everyone’s different, we offer a range of advice options to give you as little – or as much – advice as you need.

You can get advice over the phone from one of our financial planners about the best way to invest your super or pension – free of charge. Call Member Services on 1800 757 607 to speak to a financial planner.

If you’d prefer to meet with a planner, or you’re looking for advice that will provide you with a strategy to achieve your longer-term financial goals, you can make an appointment to meet with one of our financial planners.

The information on this page has been issued by Maritime Financial Services Pty Limited (MFS). It contains general information that doesn’t take into account your individual objectives, financial situation or needs. It’s important to consider how appropriate this general information is in relation to your situation before making an investment decision. We recommend that you seek financial advice before making any decisions regarding your super or investments. The information on this page is current at the time of publishing.