May 24 2022
Investment Update

Investing in volatile times

As volatility continues in global markets, it’s natural to question how best to manage your investments. For many, the temptation to panic and let fear take over is a natural reaction – and an understandable one at that. But one thing experience has taught us is that when markets fall, you shouldn’t try to time markets by switching your superannuation investments to cash.

Switching your super to a ‘safer’ investment like cash may seem like the right action at a time of instability, but equally, it might not be. The main reason is that you may mis-time the market and subsequently miss out on the benefits when the markets rebound.

Taking solace from history

Whilst past performance is not an indicator of future performance, we can take comfort in the ability of Rest’s Core Strategy to recover from downturns and volatility in global markets. Read more about our investment beliefs, approach and how we invest to grow your retirement savings here.

Core Strategy unit pricing graph

Source: Rest Core Strategy unit pricing, May 2022

Using the start of the Covid-19 pandemic around March 2020 as a recent example, you’ll see from the graph that Rest members who stayed the course and remained invested in Core Strategy had recouped their losses by Dec ‘20. However, those who switched to cash and were waiting for the end of the pandemic to switch back missed out on the gains made during this period.

For example, if a Rest member started the year with $100,000 invested in the Core Strategy (and, for simplicity, there were no additional contributions made) had switched to cash at the end of March and then waited until the end of November when effective vaccines were announced before switching back – they ended up around $12,000 worse off than if they had stayed in Core Strategy and rode out the volatility.

So, what should I do now?

For most of our members, the better course of action is to make sure you’re comfortable with the risk profile of the investment option you’re currently invested in and let the markets have time to recover. Super is a long-term investment, and the Core Strategy continues to deliver competitive returns with a proven track-record of weathering previous storms to recover once markets settle.

But what if I’m close to retirement and don’t have the luxury of time?

Every circumstance is unique, so we always recommend obtaining personal advice.


Check your investment choice is right for you

You can spend just 7 minutes using our online Investment Choice Solution that will ask you some simple questions to help you learn more about your investment risk profile and assist you in making a decision on which Rest investment options may be right for you.

Get digital advice

If you’re still concerned about the future of your investment and would like to speak on the phone to a Rest Adviser, book a call today.