By UQ Business School superannuation expert Dr Natalie Peng
In an era marked by high interest rates, persistent inflation and escalating geopolitical tensions, most notably the latest US tariffs on Chinese imports, market volatility is no longer the exception but the rule.
For Australians, this volatility has made superannuation feel less like a secure long-term investment and more like a moving target. Yet, the right strategy tailored to your stage of life can turn uncertainty into an opportunity.
Explore how to navigate today’s complex economic climate by aligning your superannuation approach with the realities of global markets and the rhythm of your career, whether you're just starting out, mid-way through, or approaching retirement.
A shifting global landscape
The global economy continues to feel the shockwaves of policy decisions far beyond our shores. These developments don’t just impact financial headlines; they influence the performance of your super fund, especially if you’re invested in international equities or sectors tied to global supply chains.
Growth-oriented portfolios are particularly exposed to these swings, while defensive assets face their own pressures from shifting trade patterns and currency fluctuations. For Australian superannuation members, this complexity requires not just awareness but also a smart, adaptable approach.
Early career: the advantage of time
For professionals in their 20s and 30s at the beginning of their careers, market downturns can be disconcerting, but they’re also a potential advantage. With a long investment horizon, young investors are well-placed to ride out short-term dips and benefit from long-term growth.
Embracing a portfolio that includes higher-growth assets may lead to greater returns over time. It’s equally important to develop a habit of making regular contributions, even if modest at first. The compounding effect of these early investments can be substantial. For instance, contributing just an extra $2,000 per year starting in your 20s could grow to over $200,000 by retirement, assuming average annual returns of 7 per cent, all thanks to the power of compounding over time.
At this career stage, understanding the structure and performance of your super fund is crucial. Some funds allow members to tailor investment options with specific regional or sector focuses, such as portfolios that may benefit from trade diversions or domestic infrastructure spending. The more informed your decisions now, the more empowered you’ll be in the decades ahead.
Mid-career: recalibrating with purpose
In your 40s and 50s, superannuation begins to feel more real. Your balance is growing, and the choices you make now can significantly influence your retirement outcomes. This period calls for careful recalibration. While maintaining exposure to growth remains important, risk management becomes equally vital. Diversifying across sectors and ensuring your portfolio is resilient to economic shocks, such as those stemming from trade wars or currency shifts, can help protect the wealth you’ve built.
This life stage is also an ideal time to consider increasing your contributions. Leveraging tax-effective strategies like salary sacrifice can help you build your super while reducing taxable income. Given the increasing complexity of global markets, many professionals in this stage benefit from a consultation with a financial adviser or their super fund’s advice service to align their investments with evolving goals and risk tolerance.
Nearing retirement: protecting what you’ve built
As retirement approaches, the focus naturally shifts toward capital preservation. However, this doesn’t mean withdrawing entirely from growth assets. A common mistake is to become overly conservative, retreating to cash and inadvertently locking in losses or falling behind inflation. Instead, a more balanced strategy can provide both security and longevity.
Maintaining a portion of your portfolio in growth-oriented assets can help guard against the risk of outliving your savings. At the same time, building a buffer of cash or low-risk assets to cover short to medium-term needs can reduce the likelihood of needing to draw down your super during market downturns. Reviewing your drawdown strategy in light of tax considerations, Centrelink impacts and investment returns is essential, and professional advice can help optimise these decisions. Transition-to-retirement products may also offer a way to ease into retirement while preserving income flexibility.
Looking ahead: strategy over reaction
Market volatility, especially in the current climate of trade disputes and macroeconomic uncertainty, isn’t something to fear, but it demands attention. Superannuation remains a long-term game and staying the course doesn’t mean standing still. Reviewing your investment mix regularly, understanding your fund’s sector and geographic exposures, and adjusting your strategy as you move through different stages of life can all help ensure your retirement savings remain on track.
The key isn’t to react impulsively to headlines but to remain informed, engaged and adaptable. Whether you’re at the beginning of your career or preparing to draw down your super, clarity and confidence come from aligning your strategy with both your personal circumstances and the broader forces shaping the global economy.
Read more from Dr Peng on The Conversation: What should you do with your super if you’re near retirement?
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