Yes, your super has fallen, but you don’t need to freak out

If you’re currently Googling questions like “Should I withdraw my super?” or “Should I change my super fund?,” stop what you’re doing because we need to talk.

When US markets took a dive earlier this month, people understandably began to freak out. Because when that happens, we’re hardly talking about play money, it’s big bucks at stake.

Super balances might be looking a bit wobbly at the moment, but they haven’t cracked just yet.Credit: Dionne Gain

As a brief recap that hopefully won’t be too triggering, the S&P/ASX 200 plunged 3.7 per cent and the ASX 200 lost more than $130 billion in two trading sessions, which tracked with losses on Wall Street.

All of this was kicked off by the release of US employment data, where the job growth figures were well below what the market had been expecting. From there, the figures saw the markets drop and lead to many fearing that a recession may be just around the corner.

Considering this day from trading hell was the worst daily fall since 2020, aforementioned freaking out was understandable. It is a very natural response to have when something takes an unexpected turn and leaves us feeling confused for either not seeing it coming, or worrying about what it could mean for our financial wellbeing.

That it came during a prolonged cost-of-living crisis, at a time when so many are already struggling to make ends meet, was the cherry on top of the freak-out sundae.

When you invest for the long term rather than the short, the odds of being financially safe at the very least are as close to guaranteed.

Even though the market all but rebounded within days, it is still too early to say if we’re entirely out of the woods yet. Naturally, because we have long memories and are generally risk averse when it comes to things like our retirement plan, people are still seriously spooked.

It’s here that the 2am Google searches relating to our superannuation come in, or people asking me just about every day if they should be withdrawing their super or looking to change their super funds.

Every person’s financial situation is unique, so I’m not going to tell you personally what to do, but what I will say is this: history is very informative, and we have a fair bit to go off of. So if nothing else, try to quieten that panicked voice in your head for a moment and let figures of the recent past guide you.

Since its mandatory introduction in 1992, superannuation has become a core part of our national identity. Most of us are rightly proud to live in a country that requires employers to future-proof our retirement so that we can live safely and comfortably in our older age.

Former prime minister Paul Keating (right), whose government introduced compulsory superannuation, speaks at a superannuation roundtable hosted by Anthony Pratt (left).Credit: Louie Douvis

So any risk to that, or any dip in our super balances like those recorded earlier this month, feels like a seriously unfair and unwarranted gut punch.

Following the global financial crisis in 2007, APRA reports Australian superannuation funds experienced losses of more than $200 billion throughout 2008 and 2009. In real terms, this saw people log into their super accounts and see tens of thousands of dollars – or sometimes more – suddenly gone.

But, what the APRA data also shows is that while those two years were utterly brutal, by 2010 super assets had returned to their pre-GFC level. And every year after, assets continued to grow.

Now, don’t get me wrong: two years is a long time and it’s a lot of pain for many people, not least those who had just retired or were on the verge of retiring. But this is where the factor of time comes into play.

The most important thing when it comes to any investment is time, and how much time you spend with it. For example, if you look at any 30 year period across the history of the ASX, you’ll see major dips and major wins. But most importantly, you’ll see that no one has lost money if they stayed invested over the entirety of that period.

That’s because when you invest for the long term rather than the short, which is the fundamental principle of our superannuation scheme, the odds of being financially safe at the very least are as close to guaranteed as you can get in the investing world. But much more likely than not, you’ll come out a winner.

Another important thing to keep front of mind when you’re feeling spooked about long-term investments, and especially superannuation, is that over the average lifetime, the share market will have seven dips.

That means there will be seven times throughout your lives (the GFC being one of them), where you log into your superannuation account and see a dip in the balance. This won’t feel good. It might make you slightly scared.

These moments of market dips trigger a feeling of risk because to an extent, all investments are a risk. But unlike some other forms of investments, superannuation is a relatively calculated and highly safeguarded one.

Of course, there will be different factors at play that mean one person’s superannuation figure ends up being higher than another person’s. But at the end of the day, if you come out with more money than what you initially put in, it’s still winning.

And if you can remember that a dip is just that, and that the market has a strong history of correcting itself over a relatively short period of time - say two bad years over a 30-year-long span, that should be enough to help you take a deep breath, step away from the search engine, and feel a little more reassured about the future.

Victoria Devine is an award-winning retired financial adviser, best-selling author and host of Australia’s No.1 finance podcast, She’s on the Money. Victoria is also the founder and director of Zella Money.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.