Could the COVID-19 coronavirus impact your superannuation? 

Daniel Herbon from Super Consumers Australia which is an independent, nonprofit consumer organisation joins Dave to explain what  you need to know about the current volitile stock market due to the Panademic Covid 19


You need to know

– The consensus from experts is not to panic at the impact of the coronavirus on the share market

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– The market disruption can, however, be a good opportunity to consider whether the risk level of your super is right for your age and goals

 International share markets have been on a roller-coaster since the COVID-19 coronavirus hit headlines, recording both dizzying highs and lows.

Super funds have reported an increase in members contacting them and wanting to know if their retirement savings are safe.

So, what should you do with your super as the market fluctuates?

In most cases, nothing.


No need to panic

It’d be easy to be alarmed about the impact the public health crisis is having on the share market and, by extension, your retirement savings.


The consensus from experts, however, is that now is not the time to make major changes to your super.


“If you look at history, these tragedies impact people but they’re short-term health crises, not long-term financial crises. In the long term, we know the share market goes up.”


The share market has historically rebounded strongly after dips caused by other public health crises such as Ebola, SARS and swine flu.


Review your risk strategy

While nobody is encouraging super fund members to panic, it could be a good opportunity to review whether the risk level of your super is right for you.


The accepted wisdom is that younger people can have their super invested with a more high risk/high return strategy (including more exposure to shares) when retirement is some way off and they’re still accumulating retirement savings.


For people who’ve already built up their retirement savings, a more conservative approach (with less exposure to shares) might make more sense. You don’t want to be the person exiting the market just after a crash.


Many super funds also give you the ability to reallocate where your super is invested through their online platforms. This can include allocating some of your super (or just new contributions from your employer) into a conservative option like cash if you’re looking for a low risk/low return strategy to protect your savings.


A financial planner can also help you with the risk profile of your super if you’re unsure – see our guide on how to find a good financial adviser.


For people who aren’t approaching retirement, a market downturn like this one can actually be good for their nest egg in the long run.


“Anyone under the age of 40 should be cheering the market going down,” says Pape. “The stock market’s on sale and we know the stock market always goes higher.”


Focus on the fundamentals, like fees

The Productivity Commission previously highlighted the impact high fees can have on your retirement savings. A seemingly minor increase in fees of 0.5 percentage points can cost a typical full-time worker a staggering $100,000.


As a rule of thumb, you should look for total fees of 1% or under for your super. This will have a major impact on how much you end up with in retirement, coronavirus or not.

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