Making super and investment decisions: Four tips during COVID-19 and beyond

MoneySmart
(ASIC)

During these uncertain times, you might be nervous about your investments. It's important to consider your long-term goals and make well-informed decisions.

Here are some steps to take with your super or investments in shares to ride out ups and downs in the investment markets.

1. Avoid focusing on market volatility

When investment markets are volatile, it can be a good time to review your investment strategy. But don't make any rash decisions based on recent market falls.

Some investors panic when markets fall and decide to convert all their investments to cash. However this means you lock in your losses and you miss out on any investment market recovery. Markets typically recover over the long-term.

Diversification across a broad range of asset classes is the best defence to ride out the ups and downs in the markets at any time.

Super in an uncertain investment market

If you're concerned about your super balance taking a hit, remember super is a long-term investment. Over time it will recover from the ups and downs in investment markets.

If you're close (5 years or less) to retirement, understand your retirement income options, take your time and avoid hasty decisions.

Consider getting financial information and guidance from:

• a licensed financial adviser
• your super fund
• a Services Australia Financial Information Service officer

2. Don't try to time the market

It's not a good idea to sell shares or other investments based on daily headlines.

Even the most skilled and experienced investors have difficulty predicting the best time to buy and sell. You might sell your investments only for markets to recover soon after.

Holding onto your investments, even during downturns, can be an effective strategy if your financial goals and situation haven't changed.

3. Review your financial goals

Unexpected events can impact your financial goals.

Talk it over with your family, consider your long-term goals and only make well-informed decisions

If you've become unemployed, for example, you might need to cash out some of your investments for short-term expenses. Only do this if you have no savings to draw on and have explored all other options such government support and applying for financial hardship.

If you do have to draw on your investments, only cash out some of them, if you can. That way you can minimise your losses and still have some money invested when the market begins to recover.

If you're using a financial adviser, now is a good time to ask them to review your financial plan.

4. Beware of investment scams

Beware of cold-calls and unsolicited investment offers and the promise of big returns. If it sounds too good to be true, it usually is.

Making hasty decisions, like panic selling or buying shares, can make you more vulnerable to investment scams.

Scammers exploit fear with fake investment offers promising to recover your losses.