How market volatility affects your super

Key takeouts:

What’s happening: The United States (US) government's recent announcement of new tariffs on imports have caused global market uncertainty and drops in share markets.
Think long-term: Super is for retirement; short-term dips are expected and part of a bigger picture.
Diversify investments: most of Rest’s investment options are diversified, being in different asset classes can help smooth super returns over time.
We can help: before making any decisions or changes to your super, reach out to a Rest Super Specialist

Recently we saw global share markets generally experience a drop, and for many of us, that drop was reflected in our super balances.

Why did this happen?

The US government implemented or increased a range of tariffs across February and March, focusing largely on US imports from Canada, China and Mexico. All aluminium and steel exporters to the US, including Australia, had 25% tariffs imposed on these goods. These “trade wars” have unsettled global markets as pricing impacts flow through to companies, countries and share markets.

More recently on 2 April, additional ‘reciprocal’ tariffs were announced that were broader than many had anticipated. Given the potential for these far-reaching tariffs to cause price rises and impact economic growth and interest rates, the result has been widespread uncertainty across global markets.

What does this mean for my super?

When markets fall and we see a dip in super balances, these fluctuations can be unsettling, but it’s important to remember that movements in account balances are normal over time. This is because markets go up and down, and super balances typically reflect this. While we can expect some short-term market challenges from the news, longer-term history has shown us that markets (and therefore super balances) do bounce back.

Our Rest Investments experts are watching and analysing the tariff news closely and managing our portfolios to ensure they are well-positioned for the uncertainty we are experiencing.

Generally, the key takeaway here is that super is meant to be a long-term investment, building up as you work towards retirement.

Here are some essential points to remember:

Keep perspective: Markets go up and down, and short-term drops don't necessarily indicate a long-term trend. Historical data shows that markets have bounced back from lows to achieve growth over longer periods of time.
Focus on the future: Your super is geared towards the future – your retirement years. Immediate market ups and downs are less significant if you’re looking at a timeline that spans decades.
The danger of trying to time the market: Trying to guess the best times to get in and out of the market is very challenging, even for professionals. By attempting to avoid losses by switching investment options during a market drop, there's a risk of missing out on the recoveries and gains when the market goes back up.
Embrace diversification: Most of Rest’s investment options contain a mix of assets to balance out risks and returns. Different asset classes typically don't move in sync. This means when some are down, others may be up. This helps to smooth super returns over time.

Nearing retirement? Here are some key takeouts to consider:

Try to avoid timing the market:  switching investment options at the wrong time and without advice can lock in losses and risks missing a market rebound.
Diversification:  many of Rest’s investment options combine asset classes to help balance risks and smooth returns over time.
Market movements: market changes can take a while to reflect in super balances (both up and down), so impacts may not be immediately visible.
We can help: different strategies are available depending on your retirement stage, so it’s best to have a chat to a Rest Super Specialist.

What should I do next?

Before making any decisions about your super based on recent market movements, a better approach would be to consider your risk appetite, and how your current investment option/s fit within your broader financial goals and timeline. Making impulsive changes could derail your long-term strategy.

A good next step is review your investment options (which you can do on the Rest App, or by logging in to your Rest account online).

For more information on Rest’s investment options you can visit https://rest.com.au/investments/options.

I’d like to know more about markets going up and down

To learn more about market dynamics and how they relate to super balances, read this article on understanding why your super balance goes up and down. You can also check out some of our Super Tips articles below for more valuable information.