Member Notice: Investment Update

25/03/2020

When financial markets experience an upward or downward spike it can be difficult not to get caught up in the emotion of the moment. From attention grabbing news headlines to predictions from industry economists – it seems everyone has a different opinion on what the market will do next and the action you should take. But when it comes to your superannuation, the best strategy is to remain focused on the long term.

While the catalyst for this market selloff is unusual, extreme periods of market volatility are not. It’s important not to lose sight of the fact that the uncertainty we are experiencing today is precisely why investors are compensated for taking risk. It’s why shares command a higher risk premium than cash and bonds. It’s why investors in share markets have earned higher returns over the long term. And it’s why investors who keep a long-term focus see events such as the current market selloff as just part of the normal market cycle, even though it may seem anything but normal today.

No one, including the medical experts, has a good forecasting model for the timing and extent of COVID-19 impacts. But superannuation is a long-term game. Generally speaking, what occurs in today’s market is not likely to have a significant impact on your super investments over the long term. And for most people, long term does not mean one, three or even five years but more like 20, 30 or 40 years. Which means that staying invested, and not yielding to the temptation of withdrawing from the market, is one of the most important decisions you can make.
 

This website is provided by Mercer (N.Z) Limited, as the Manager of the New Zealand Defence Force KiwiSaver Scheme, the New Zealand Defence Force FlexiSaver Scheme and the Defence Force Superannuation Scheme (the Schemes).