Tuesday, 22 January 2008

Don't Panic!

The current financial crisis that we are experiencing is quite nerve racking. Today, the All Ords feel by about 7% and all the gains, if not more, made over the last 12 months. Today, it closed at 5222 points, down by 408 points. As reported by The Age, this is the one day biggest drop in the share market in the 18 years, and the longest losing streak since January 1982.

Luckily, it does not really impact me significantly as we only own a small parcel of Telstra shares, which was purchased during the T2 offering. However, the real impact to us would be how our superannuation will be performing. Like many other Australians, some part of our superannuation are invested in the local Australian share market. With the investment mix of my superannuation, about 10%-15% is expose to movements of the sharemarkets. The way I view it, superannuation is a long term investment and is not due to mature for another 30 years for me. So I have decided not to panic and leave the investment mix alone to ride the down slide out.

My friend calls this the sleep factor. If the situation is affecting you to an extend that it is disturbing your sleep at night, it is probably time to be less aggressive with the investment mix.

The market did slide down quite significantly when the dot com bubble busted just after the turn of the century and my superannuation net worth actually went down, but it recovered in spectacular fashion.

For some people whom superannuation are about to be accessible in the next few years, these are certainly nervous times. I would say to them to get some profession advice.

4 comments:

Debt Dieter said...

I'm the same. I've got ALL my super in Australian shares at the moment, so it was a bit of shock to login in and see the damage yesterday. I'm going to ride it out too as I've got more than 25 years togo until I retire.

tehnyit said...

A long term investment is a good view to take in this situation.

Well, the market bounced back by about 4% today. Let's hope that it keep bouncing back up.

Louise said...

it's good to see the market back up a bit today, I've got a 60% of my super in australian shares, and 40% in overseas,

Andy said...

Youv'e got the right outlook and strategy. Super is a long term investment. However, I think the US markets are going to get worse and be stuck in the doldrums for at least the next 2-3 years. So I would consider switching your super investment options to focus on either Australian or Asian based shares. Switching is quite easy to do (you can do it online in many cases) and should have a minimal or zero charge.

Cheers,
Andy