Anyone thinking of going “risk off”?

I went into my superannuation account last night to change it to lower risk (more cash allocation). I got to the final confirmation screen and decided to just ride out whatever comes, and I left it the way it is.

 

That would be excluding dividends of which ASX pays a high proportion compared to other parts of the world due to our franking credits system

 

My chart agrees with @SatayKing chart we are of course talking about total return?

 

I think you need to reset the 'total return' to zero at that peak just before GFC, or you are including gains made prior to that time.

 

Were you planning to access your super in the next 5 to 10 years?

 

Nope, not even in 20 years, I've got ages to wait. I do enjoy seeing the balance going in the right direction, but understand my contributions in a down market get me more units at a discount.

 

Apologies @Baker you are indeed right...

 

Unless they brought a MV Augusta with the profits and canned off @The Artisan

 

Sorry Paul i think you are wrong here - technically from 2008 highs, it only took 5 years (in 2013) for the index to surpass prior highs. This is when taking into account the ASX Accumulation Index.

Meaning that had you invested into something similar to the VAS ETF (this had inception date 2009) at the top before the 2008 GFC and assuming you had diamond hand and switched on DRP then you would have recouped all the paperlosses by 2013.

I believe distribution should always be factored because of the relatively high dividend nature of Australia (2-3% a year). If you exclude this and just quote the index return, we will be missing the whole picture.

 

The one I posted was the net total return which is probably similar. The definition of it is:

"The S&P / ASX 200 Net Total Return Index is similar to a total return index with cash dividends reinvested on the ex-date of the dividend. The difference is that a net total return index reinvests dividends after the deduction of withholding taxes where the withholding tax rate is that applicable to an investor in a non-tax treaty country."

Capitalisation indices

 

Its awesome to see you walk back from the edge.

You need to forget about this part.

And concentrate on this part. Its not just new contributions that get better return but also distributions with-in the fund are re-invested at a higher rate.

At your stage the thing that will assist you the most in retiring with more wealth is a Bear Market now. You just have to stay the aggressive option during accumulation no matter what the interim balance does.

slowly research "risk off" strategies for the period starting maybe 5 years out from preservation but in the meantime just keep it simple and continue to blindly contribute to aggressive option and forget about volatility and back steps in your balance.

 

Thanks @dunno, honestly it was this forum and the advice to read things like Peter Thornhill's motivated money that kept me on course. I'm now actually considering uping my salary sacrifice contributions again when my payrise comes through in the next couple of months. Nothing too dramatic but a little bit more now will be huge when I retire.

 

The simple chart attached in this post will help you to understand what frequently happens in the share market. Easy to follow steps which you could apply if you wish to your decision making processes.

 

Thanks for that, it's funny how well that chart applies to most people. What amazes me about the stock market is how complex it has become, with so many financial instruments, charts, analysis formulas and multi billion dollar fund managers, but the way to make money, as an average investor, is to buy ETFs or a mixed bag of industrial shares through DCA and never sell.

 

Don't know much about them actually. Maybe they were developed to pander to a gambling instinct in some and trying to find "the edge" to which many aspire.

As to share market fluctuations well...............

 

Revisiting this post in context of recent events and ripples following on (or with the potential to)…anyone followed our approach of moving out of higher risk/growth investments for the next 6-12 months in order to watch and wait?

.. I should add, we’re mid 40s and retirement at least 10-15yrs off, so it’s not a case of impending cessation of paid work that’s the driver. Question purely about outlook - recent big growth period now behind us (or feels like it), so my original post was about whether you take chips off the table and hunker down until there’s more clarity on economic direction and range of outcomes