The share market slide may have been costly for super but the long term looks good.
Retirees who hung up their hat this month were up to $3300 poorer due to the stock market slide, SuperRatings said yesterday.
While in the past 12 months, superannuation balances have remained in positive territory, the recent volatility has likely shaved an average of $2000 from Australians’ nest eggs,” SuperRatings Chief Executive Kirby Rappell said.
The funds monitor used the SR50 Balanced (60-76) index to estimate that returns in January were 0.9 per cent higher than in December.
“However, January’s return will have been clawed back during the recent market volatility, with the ASX 200 declining 3.3 per cent from 1 February to 14 February,” SuperRatings said.
“For the typical balanced option account with $100,000, this represents a loss of $2000.”
However, super members with exposure only to Australian shares would have seen $3300 stripped from their balances.
SuperRatings’ SR50 Balanced index showed the past 12 months’ return was still a healthy 11.9 per cent, thanks to 2017’s bull market.
“Over five years, the balanced option return is 9.2 per cent, highlighting the long-term strength of the superannuation system,” SuperRatings said.
Earlier this month, Mr Rappell told YourLifeChoices that superannuation members not planning to retire soon should not panic.
“When there is a market drop, the balance of your superannuation suffers; however, it will only affect your retirement proceeds if you withdraw your funds, and is more of an issue for members nearing retirement,” he said.
“With the median balanced fund generating returns of 9.2 per cent and 5.2 per cent over five and 10 years to the end of 2017 respectively, it is important to keep things in perspective.
“If you do not need to withdraw your funds soon, then there is time to ride out the period of poor performance, allowing your account balance time to recover.”
Have you retired in the past fortnight, and if so, how was your super balance affected? Do you have a balanced, growth or conservative fund? Do you think funds should invest so heavily in shares?