Why volatility isn’t a sign you did something wrong

​When we see our superannuation, balance rise and fall due to volatility, we as humans instinctively think that there’s something wrong and feel that we have done the wrong thing by putting ourselves in that situation.

During the current time, the price of Australian/International companies has dropped by circa 30%. This means that if your super balance was at $1,000,000, it would now be circa $700,000.

You can’t look at that drop in value without thinking something has gone wrong and feeling slight panic.

However, this is the price you pay in order to receive the return you need.

The three main things that are looked at with clients are:

1. How much do you have?
2. How much do you need?
3. What rate of return do they need?

When asking these three questions, it becomes clear that there aren’t many people who have enough retirement savings to afford to leave it in that low return, low volatility environment.

You want to be invested in an assets such as shares that will have a large amount volatility as they will get you the return you need in the long run.

You must see the volatility as regular fee that you need pay to be able to reach your retirement goal, not as a fine.

This is an important frame of mind to be in when investing, as it will help you to remain calm and stick to the plan during times the markets drop.

It’s important to know that rash decision, such as moving all your super into cash during highly volatile periods can really harm your retirement savings in the future.

Be prepared for the inevitable market highs and lows (THEY WILL ALWAYS HAPPEN), focus on the long-term goal and stick to the plan; you’ll thank yourself for it.