Investor InsightsSuper Stategies > Understanding why your super balance keeps changing

Understanding why your super balance keeps changing

October 2019

Reacting to short term fluctuations may not be the best option for growing your super.

Being able to check the balance of your super anytime, anywhere, when you log in to your super account online is a good thing. If you look at your balance regularly, you’ll find that it generally tends to grow with regular contributions and investment earnings.

But many people ask ‘why does my super balance keep changing?’

Watch this short video to learn more.

The first really important thing to understand about your super is that it is an investment. This means that the return is potentially subject to the volatility of investment markets.

For most people their super is the biggest investment they will have, perhaps other than the family home. This means that it is important to be engaged with how it’s tracking and speak with your financial adviser to help achieve your financial goals.

The next important thing to understand that your super is a long term investment. What matters is how it performs over the long term, rather than the ups and downs of investment markets along the way.

‘Markets fluctuate, so it’s important to focus on the longer-term view.’ says Bert Dugdale from RI Advice Alderley.

‘While seeing the impact of market volatility on your super balance may cause concern, the key to successful investing is having an investment strategy that’s right for you, and then sticking to it.

Responding reactively to market volatility can mean making changes to your investments at exactly the wrong time. For example, moving into more conservative investments during a downturn, crystallises your losses, meaning you may miss out on the benefits of any subsequent rebounds.’ said Dugdale.

Importantly, if you are concerned about your current investments, you should talk to your financial adviser about your investment strategy and the suitability of your investments.

Establishing an investment strategy that’s right for you is about finding a balance between your investment time frame, your risk tolerance and personal financial goals. A qualified adviser can help you achieve this balance.

Superannuation funds in Australia are invested across the main asset classes of shares, property, fixed income and cash, and can also include other more specific asset sectors such as infrastructure and commodities.

Growth assets like shares and property are more volatile, higher risk investments over the shorter term. However, these factors can often drive a successful investment strategy and have the potential to provide stronger investment returns over the long term.

Conservative or defensive investments like fixed income and cash, while far less likely to fall in value, generally provide lower returns over the medium to long term. Too much emphasis on these investments could jeopardise your longer term investment needs.

Super funds generally offer a choice of diversified investment options, which you can select from depending on your investment timeframe and risk tolerance. These options offer a mix of investments across different asset sectors, with different ratios of growth and defensive assets.

This mix means that each offers a different balance between potential investment growth and investment risk (volatility). This also means that each is generally more appropriate to different investment time frames.

While you can select from these ready-made diversified investment options, your adviser can also guide you to construct your own investment strategy by choosing investments within each asset sector.

Superannuation products like OneAnswer Frontier Personal Super and Pension offer a range of more specific single asset sector investment options. Choosing from these, you can work with your financial adviser to tailor your own investment strategy and portfolio – designed specifically for your investment needs.

Finally, key things to remember:

  • Set an investment strategy with your adviser and review it at least annually with them – don’t be afraid to ask questions, use their knowledge and access to investment expertise.
  • Get engaged with your super investment, but remember that short-term surges and tumbles can be expected, and discuss any planned changes with your adviser.
  • Stay focused on the long term.

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Before re-directing your super or moving your money into your product, you will need to consider whether there are any adverse consequences for you, including loss of benefits (e.g. insurance cover), investment options and performance, functionality, increase in investment risks and where your future employer contributions will be paid. Any investment is subject to investment risk, including possible repayment delays and loss of income and principal invested. Returns can go up and down. Past performance is not indicative of future performance.

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