The weakening Aussie dollar could be harming your super
As the Chinese Yuan rises, share markets around the world are falling. This is not good news for your super as the typical Australian superannuation fund invests half its money in shares.
Australian share prices are down by almost 20 per cent since last May. All over the world, shares are down approximately 10 per cent within roughly the same time period.
How does this affect your super? A 10 per cent loss on global share markets means that super account balances drop by about 5 per cent.
So for an account with $100,000, that’s a loss of $5,000. For an account balance of $200,000 that’s $10,000 lost. However, superannuation is a long-term investment strategy and should be able to weather out the ups and downs of the global share market.
It doesn’t help to evaluate a super fund for performing well or poorly over the last 12 months – what will give you an indication whether your super fund is the right one for your money is whether they have performed well over the last few years.
Over the last seven years to the end of the 2015 financial Year, the typical balanced investment super fund produced an annual return of 6 per cent, according to SuperRatings. Over the last five years to June 30 2015, the typical balanced investment option of the 50 largest superannuation funds produced an average annual return of 9.1 per cent.
This financial year, we can expect that the market falls in July and August will mean lower returns – but it’s not a cause for alarm.
However, those nearing retirement may want to consider whether their super is too risky. But even so, the investment time frame will still be a long during retirement.
Related links:
Is the government going to raise the age when Australians can access super?
In light of the pension changes, you need to consider this
Why are a record number of Aussies accessing super early?