“I'm 35 years old and aiming for an early retirement, preferably within the next 15 years. My super investments are currently the default diversified options. Will market volatility negatively affect my accumulation if I keep the default options? I'd like to know whether I should be more involved to help meet my retirement goals."
-Question from Nick in Tea Gardens, NSW
Top answer provided by:
James Rawlings
Hi Nick,
Based on the information you provided, you are aiming for an early retirement in the next 15 years and your super investments are in the default diversified options. You would like to know whether market volatility will negatively affect your accumulation if you keep the default options and whether you should be more involved to meet your retirement goals.
Market volatility can have a negative impact on your superannuation balance, especially if you are invested in high-risk assets such as shares. However, it’s important to remember that superannuation is a long-term investment, and that market volatility is a normal part of the investment cycle.
Knowing you have a 15-year time frame we would typically suggest you invest in the high growth options. The reason being that over the medium to long-term high growth has always outperformed.
You will have more short-term volatility over the medium-term.
However, given your age, you do have time to ride out this volatility.
Volatility will impact you in the short-term. However, remember that superannuation is a long-term investment. It is there to help you fund your retirement.
If you are concerned about market volatility and would like to be more involved in managing your superannuation, you may want to consider seeking professional financial advice. A financial adviser can help you develop an investment strategy that is tailored to your individual needs and goals.
Superannuation funds are invested, which means that they can earn compound interest. This means that the money in your super fund will grow over time, providing you with a larger retirement nest egg.
After retirement, you may be eligible for a number of government benefits, such as the age pension. However, you shouldn’t rely on government welfare for your retirement planning.
While it can help supplement your income in retirement, it isn’t enough to provide a great quality of life through your golden years. If you have a good level of superannuation, you may be able to reduce your reliance on government benefits and get the most out of your retirement.
There are many different types of superannuation funds available, so it’s important to do your research and choose the right one for your needs.
Ultimately Nick, we would suggest you compare your super fund to other super funds to ensure you are in a low fee high, growth option.
That way you can let the magic of compound interest ensure your super grows to help you fund your retirement.
Best of luck!
James Rawlings
While the Adviser Ratings Website facilitates the question and answer functionality, all such communications are between users and authorised financial advisers, of which Adviser Ratings has no affiliation. Adviser Ratings is not the advice provider and does not provide financial product advice and only provides information that is general in nature.
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Comments1
"It's important Nick is aware under current legislation he is unlikely to be able to access his super funds until age 60."
Ben 15:07 on 22 Nov 23