Four Tips To Stay Super Calm and Carry On

Last week was big: an interest rise, fuel prices climbed higher, sharemarkets fell lower; and to top it off the International Energy Agency encouraged us to work from home and travel less. Remember last time an important group signalled to work from home? The start of the COVID-19 crisis still looms large in many people’s minds, but the panic selling we saw amongst some of our super fund members certainly stands out to me. Every crisis is different, but when it comes to your super it’s important to stay calm and carry on.

The cost of NOT staying calm during a market crisis

When markets drop, we see some super fund members panic and sell down higher growth investments in favour of cash. This can take a toll on your super balance, which is a very long-term investment.

Let’s use the COVID-19 crisis to reveal the cost of panic selling. Exhibit 1 lays out three scenarios for an investor who put $10,000 in Australian shares at the end of 2018 until today**:

• “Stay calm and carry on”: the investor who rides out the COVID market volatility. Investment return generated = 9.9% p.a.
• “Panic and then switch back”: the investor who switches out of shares and into cash in March 2020 at peak uncertainty. At the end of 2020, once vaccines are approved, this investor switches back into shares. Cost of switching? $4,800 worse-off (relative to “Stay calm and carry on”). Investment return generated = 5.8% p.a.
• “Panic and paralysed”: the investor who switches into cash in March 2020, but is then paralysed by the difficult decision of when to switch back to shares. Cost of switching? $9,500 worse-off (relative to “Stay calm and carry on”). Investment return generated = 0.4% p.a

Exhibit 1: Cost of panicking during COVID-19: Australian Shares and Australian Cash

*Return data from 31 December 2018 to 19 March 2026. Annualised return displayed. Source: Bloomberg, UniSuper. Australian Shares is the S&P/ASX 200 Total Return Index* and Australian Cash is Bloomberg AusBond Bank Bill Index**. Daily return series applied. *Assumes income is reinvested and no fees, costs, taxes are incurred. Dollar figures are rounded to the nearest 100 for simplicity. Past performance is not an indicator of future performance.

Four tips to stay calm and carry on

• Know your why: if you’re clear on your retirement goals and its very long time horizon, it can be easier to stay calm. Feeling ‘comfortable’ investing in cash is tempting. But, investing in cash likely reduces the chance of achieving your retirement goals and outpacing inflation over time.
• Know the costs: Exhibit 1 shows there are two decisions to make – the point to sell and the point to buy back. Timing these decisions consistently well is impossible. The “panic and paralysed” investor cost themselves almost $10,000. It can be expensive to react emotionally to market up and downs.
• Know what to expect: past performance is no guarantee of future performance, but it provides perspective. Exhibit 2 shows the peak to trough drawdown during the Global Financial Crisis (GFC) was -50%! Yet, over average, the share market has delivered over 8% each year – well ahead of cash.
• Don’t look!: when sharemarkets are making the headlines (like they are now!), one great strategy is not to look at your account balance. “Engagement” with your super is understanding how it works, not constantly logging in to check your account balance and worrying.

Exhibit 2: Market Sell-offs between June 2020 and March 2026

Return data from 30 June 2000 to 19 March 2026. Annualised return displayed. Source: Bloomberg, UniSuper. Australian Shares is the S&P/ASX 200 Total Return Index* and Australian Cash is Bloomberg AusBond Bank Bill Index**. Monthly return series applied. *Assumes income is reinvested and no fees, costs, taxes are incurred. Dollar figures are rounded to the nearest 100 for simplicity. Past performance is not an indicator of future performance.

Last week was big and there might be more to come. It’s normal that markets move up and down in response to economic and geopolitical events. Super is a very long-term proposition and while it feels uncomfortable if your account balance is dropping, it is important to stay calm and carry on. Of course, if you’re very nervous, it’s a great time to reach out to a qualified financial adviser to do a health check of your finances to help position you for a great retirement.

The information in this article is of a general nature and may include general advice. It doesn’t take into account your personal financial situation, needs or objectives. Before making any investment decision, you should consider your circumstances, the PDS and TMD relevant to the financial product, and whether to consult a qualified financial adviser.

About Annika

Annika is the Head of Advice Strategy, Technical and Research at UniSuper. She brings over 20 years of experience across investments and wealth management in both the public and private sectors.

* The S&P/ASX 200 Total Return Index is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by UniSuper Management Pty Ltd. S&P®, S&P 500®, US 500, The 500, iBoxx®, iTraxx® and CDX® are trademarks of S&P Global, Inc. or its affiliates (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by UniSuper Management Pty Ltd. UniSuper’s products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P/ASX 200 Total Return Index.
** Bloomberg Finance L.P. and its affiliates (collectively, “Bloomberg”) are not affiliated with UniSuper Management Pty Ltd and do not approve, endorse, review, or recommend this report or any information included herein. BLOOMBERG and the Bloomberg AusBond Bank Bill Index are trademarks or service marks of Bloomberg and have been licensed to UniSuper Management Pty Ltd. Bloomberg does not guarantee the timeliness, accurateness, or completeness of any data or information relating to the Bloomberg AusBond Bank Bill Index.