Should I switch investment options?

During market volatility it can be tempting to switch into a more conservative investment option and then try to time the market to invest in riskier assets when markets recover. But it's important to remember that historically members who "stay the course" with their investment strategy tend to end up with better results*. So if you're thinking about switching, ask yourself these questions first^.

stock market board on busy street with red arrow pointing down
1. Could you lose out in the long run?

Switching at the wrong time could mean you miss out on gains when the market bounces back. This is known as "crystallising losses".

For example, super fund members who switched investment options during the depth of the Global Financial Crisis in 2009 would generally be worse off now than members who stood firm on their long-term strategy. Generally, members who didn’t make changes saw their accounts recover after the GFC because they left their investments to recover, rather than crystallised capital losses".

The markets have been reacting to Central Banks hiking interest rates to limit inflation, the ongoing Ukraine-Russia war and various other events and we can expect more ups and downs.  Trying to time these is next to impossible. It’s better to understand your risk tolerance and invest accordingly. 

2. How much longer will your super be invested for?

It's normal for markets to have cycles of ups and downs so consider if you have time to ride out short term bumps and make the most of gains when the market bounces back.

With Australians now expected to live into their 80s you could have many years until you want to access your super investment. 

So before making a switch remember super is a long-term investment, and you need a strategy that aligns with your needs.

3. Is the option you’re invested in right for you?

Rather than reacting to market volatility, you should consider your long-term investment objectives and the level of risk you’re comfortable taking on. We call this your "risk appetite".

If you didn't make an investment choice when you joined and you’re in the MySuper investment option you will have a lifecycle investment strategy where the level of investment risk decreases as you get older. If you’re unsure of your risk appetite you can receive advice about your investment options in TelstraSuper over the phone by speaking with an Adviser from TelstraSuper Financial Planning. This type of advice won’t cost you anything extra.

4. Are you switching with the herd?

Just because someone you know has changed their investment strategy doesn't mean it's the right plan for you.

Each person will have a different risk appetite and financial goals. Switching to the same investment options as your friends or colleagues without doing research and considering you circumstances and objectives should be avoided as it won't necessarily be right for you.

5. Have you sought advice?

If you want to discuss your investment options in your TelstraSuper account you can speak to an Adviser from TelstraSuper Financial Planning over the phone at no additional cost.

They can work through some questions which will help determine what option you may be suited for.  You can speak with an Adviser by calling 1300 033 166 or filling out our online contact form.

 

 

* Source https://www.investordaily.com.au/markets/42721-don-t-get-blindsided-by-volatility-superratings
^ Any general advice on this website has been prepared without taking into account your objectives, financial situation or needs. Before you act on any general advice on this website, you should consider whether it is appropriate to your individual circumstances.
 
Past performance is not a reliable indicator of future performance.