Aussie workers are worried about their super, so much so that 63 billion dollars has been siphoned into term deposits and other conservative money management. After the GFC when thousands of workers saw their retirement nest egg devastated, it became apparent that the stock market was just too risky for some. Almost a quarter of Australia's 1.3 trillion dollar pension pool is now in cash and fixed deposit interest products, so most have decided to hang on while the rest have jumped ship.
So what do the experts say? You already know the answer because they keep telling us - long term data proves that a balanced port folio provides greater returns than the alternative "safe" options. But the question is for older workers, can I wait that long?
Chan and Naylor financial planning agency partner David Hasib said people needed to be prudent and cautious when changing their super. "The biggest risk people face is the possibility of missing out on the inevitable market rebound which historically will always happen at some point" he said. In other words, if you get out of the market when things are bad you won't be there when things pick up. But let's look at the facts.
A cash-based super fund performed the best over the past 10 years but at 15 years, share funds posted a return of 4.32, 4.79 and 4.95 respectively and cash only returned 3.53 per cent a year.
But the government's Super System Review Chairman Jeremy Cooper isn't happy - he thinks Australian super funds take too much risk. "I feel sorry for all those people out there thinking- 'here we go again'. For reasons completely out of their control, bang, there goes another 4 per cent of their money" he said. "Australian super funds are just too heavily exposed to these growth assets - even in a balanced fund, you have about 60 to 70 per cent of assets in shares. And that's too much."
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