Always look on the bright side of super, and it won’t ruin Christmas

SINKING superannuation fund returns have put people’s nest eggs on track for their worst annual performance in seven years. Here’s what you should do about it.

IF you want a happy Christmas, here’s a handy tip.

Do not check your superannuation balance right now.

That’s right. Stay away from your super — it will only bring you sadness.

Sinking share markets in Australia and overseas have hammered super balances in recent months amid gut-churning global volatility.

It has wiped thousands of dollars off the value of each of our nest eggs, and forecasters are unsure when this weakness will end.

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The majority of Aussie super fund members are in default balanced options that have large weightings to shares. These funds have slumped 5-8 per cent since their August peaks.

Most super fund members have time on their side when it comes to growing wealth.

Super fund members with higher-risk investment mixes have experienced 10 per cent-plus falls in their balances. And even people in conservative options are in negative territory after being stung by bond market issues and record low interest rates on cash savings.

Super balances for Australians aged over 40 average more than $100,000, and if your fund has lost $5,000-$10,000 of its value in recent months, now is not the time you want to look at it.

Instead, remember the wisdom of that classic Jesus Christ-themed film, Monty Python’s Life of Brian, and always look on the bright side of life.

Remember the finale of Monty Python’s Life of Brian and always look on the bright side.

For most of us, sinking super fund balances are not worth worrying about because:

• They represent a nice opportunity to buy good quality investments at discount prices. If nothing has changed in an investment’s outlook other than people are selling it for less than they were a few months ago, you’re on a winner.

• Super is such as long-term investment for most of us that these short-term shake-outs won’t destroy your retirement savings. Funds have already recovered all the ground they lost during the Global Financial Crisis, and then some.

• Our funds have been due for a fall. It’s been seven years since their last negative annual performance, and experts say people should expect downturns every four to seven years.

• The compulsory nature of employer super payments means that the 9.5 per cent of our wages pouring into funds each month is getting more bang for its buck.

It’s wise to have a long-term strategy for your super. That may be as simple as leaving it in a balanced fund until your late 50s, but if you stick with it you won’t be caught out trying to time the market.

The biggest losers from the GFC were those who switched all their super to cash right at the bottom of the market plunge, then missed out on all the gains that followed. Some only dived back into riskier investments in the past year or two, and are being burnt again.

Super remains a great place to save for retirement because of its tax benefits, and many of us have investment time frames of 20-40 years. There will be plenty of rises and falls in that time.

You shouldn’t ignore your super completely over the holidays, because it’s worth checking your balance and strategy at least annually. Just don’t let its short-term shrinking ruin your Christmas.

@keanemoney