Timing is everything

And why successful investors are often also the most patient

It’s often said that Australia is a nation of investors. And when you consider that everyone who has super, is effectively an investor via their super fund, then that statement is spot on.

Of course, there are different types of investors with different goals and levels of involvement – from the super fund member who really only thinks about their super when it comes time to retire, to the full-time stock-market speculator with an appetite for risk. However, if you’re reading this article, then it’s likely you sit somewhere between the two.

Investing through super

In order to grow your super balance over time, your chosen fund will put your super in various investments – often selected by you. These could be:

• Default options such as MySuper, which aims to balance average risk with average returns
• Pre-mixed investment options that focus on your personal goals or preferences such as growth, income, or sustainable responsible investing etc
• Specific types or classes of assets such as Australian shares, international shares, property or fixed interest

Funds such as Prime Super provide you a choice in making investment options if you want it, allowing you to choose the types of asset classes you invest in.

It’s important to understand the fundamentals of investing, and recognise that super can be slightly different in that it tends to have a medium to longer-term focus.

It all comes down to timing – but might not be what you think.

Sensible, long-term investment is about balancing timing, risk appetite, and patience. One of the biggest differences between super investing and regular investing is that your super investments are held for a minimum amount of time, namely until your preservation age (i.e. the date you can start accessing your super). This means it can be handy to take a longer-term strategy, rather than reacting to shorter-term fluctuations.

Trying to ‘time the market' can be costly – especially if you don’t have the time or experience to do the detailed research required. This has led to one of investing’s ‘golden rules’: focus on time in the market instead of timing the market. This means it can be handy to take a longer-term strategy, rather than reacting to shorter-term fluctuations.

Under 40?

With at least 20 years to go before you can access your super, you have a big advantage when it comes to riding the ups and downs of investment markets. Even pre-mixed options focussing on shares or higher growth are designed to cope with up to six or seven years of negative returns in every twenty, while still outperforming CPI and other indices. This generally means you can potentially be a bit bolder or more growth-focused in your investment choices.

Over 40 and not yet retired?

Depending on when you’re looking to retire, there could still be plenty of time to tailor your super investment to match your goals and risk appetite. Playing the ‘long game’ may continue to be a smart strategy if retirement is still a long way away.  

Retired or getting close?

A lot of people nearing retirement get very nervous about the health of the markets, assuming that if they retire when the market is low, they’ll lose money or miss out on the rewards of high share prices etc. This can of course be true if you’re intending to withdraw all your super as a lump sum – after all, you can only take out what your balance is at that moment.

However, a dip in the market right when you want to retire doesn’t necessarily mean greater financial pain. If you’re drawing down on your super via a pension, such as Prime Super’s award-winning retirement income stream, then your money remains invested, and  can still take advantage of changes in the markets, and work hard for you, even after you’ve retired.

Always make time for advice.

Finally, we recommend you seek  professional guidance before making any investment decisions. You can do this through a financial adviser or, if you need guidance or you have questions about anything in this article, you can book a chat online to speak to our super specialists at no cost.