What Does Stock Market Volatility Mean For My Super?

14 March 2018
With all the news about volatility in the global stock markets, you might be worried about the impact on your super.

Fortunately, even if your portfolio suffers a loss in the short term, over the course of your working life the downturns will likely be smoothed over.

For example, in early February when losses in the Australian share market made headlines we saw a fall of around 60 billion AUD. However, overall the market was still up $44 billion from its position the previous year and $736 billion up over the last ten. So even if you are planning to retire this year, the stock market losses would only have a relatively small impact on your final super position, compared to the decades of growth it has already been through.

Overall, generally speaking small periods of volatility in the stock markets are inconsequential for long term super growth and shouldn’t overly concern you. While it definitely pays to be aware of the market’s fluctuations, super is such a long term investment that any small dip will likely be smoothed over by the time you retire.

How exposed am I to the stock market?

Compared to people in other similar economies, Australians are much more exposed to the stock market. Statistics released by the Association of Superannuation Funds of Australia show about half of all super is invested in on exchange investments, with Australian and international shares by far the most popular.

Most Australian adults have a super account and by far the most popular super investment is shares, making Australians among the most exposed in the world to the share market. This is compared to the US, where half of all households have no exposure to the share market at all. And often those that do, have less than 5000 USD invested.

Compared to Americans, Aussies are far more likely to be impacted by the vagaries of the markets. Although, any drops in shares will likely be inconsequential in the long run, it’s a good idea to know how much of your super is invested in shares. The asset allocation of your super is an important factor in the performance of your portfolio. Make sure  you are using the right risk profile for your circumstances and check to see if the asset allocation matches your needs.

Compare Superannuation with Canstar

If you’re comparing Superannuation funds, the comparison table below displays some of the products currently available on Canstar’s database for Australians aged 30-39 with a balance of up to $55,000, sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Use Canstar’s superannuation comparison selector to view a wider range of super funds.

Fee, performance and asset allocation information shown in the table above have been determined according to the investment profile in the Canstar Superannuation Star Ratings methodology that matches the age group you selected.

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