Financial Frustration - 5 Things To Consider Before Touching Your Super After The COVID-19 Crash
- Written by News Company
Though your main focus throughout the COVID-19 pandemic has likely been the health and welfare of your friends, family, and the community at large, you’ve probably also noticed that your super account has taken a hit. Additionally, the government has announced the availability of tax-free super fund withdrawals in 2020.
This has left people wondering if they should ride out the market instability, change their investment type, withdraw funds early, or just log off and pretend it’s not happening. If you’re feeling panicked or confused, take a deep breath and follow the tips below to ensure you make a sound decision:
1. Seek professional advice
Before you make any hasty decisions that could drastically affect your financial future make an appointment with SMSF accountants and financial advisors who are there to help you understand the complexities behind what’s going on with your investment.
Though your initial reaction may be to withdraw as much of your super as you can or perhaps shift to a less risky investment option, that may not be the best course of action. With compound interest that $20K you access now could mean hundreds of thousands of dollars less for your retirement. A financial expert will be able to guide you through the decision-making process with the information you need to protect your retirement fund.
2. Think long-term
If you’re still in the workforce with no intention of accessing your super in the near future, then you probably don’t need to do a thing. If you hastily sell out of your current investment option and move everything over to cash, you’re effectively locking in your losses. By contrast, if you focus on the long-term, you allow space for the market to recover and, in turn, for your super account to restore itself to its former glory.
3. Don’t obsess over it
With the impact of COVID-19 on global markets constantly being discussed in the news, you may be tempted to log into your super account every day to see whether there have been any changes you need to worry about. However, this is only going to add to your stress levels. Once you’ve followed the first two tips, it’s important that you have faith in the informed decision you made. That means leaving your super alone to do its thing.
4. Consider waiting for the market to recover
If you fall into the group of people deemed eligible to withdraw their super early due to COVID-19, that doesn’t mean you definitely should. By withdrawing funds now, you rob yourself of the compound interest they otherwise would’ve been accumulating. You’ll also be withdrawing funds during a market dip, meaning you’ll miss out on the recovery. So, it’s worth considering all other avenues of COVID-19 financial assistance before accessing your super.
5. Avoid scams
Sadly, there are already scam-artists out there trying to rob people of their superannuation. To be clear – it is free to access your super early due to COVID-19. The process can be done through your MyGov portal and you do not need third-party assistance. If you get any unsolicited calls or emails regarding early access to your super, do not respond. Instead, report them to Scamwatch to help protect other people.
If you take away just one thing from this article, it should be this – ensure every decision you make regarding your superannuation is well-informed. If you seek expert advice, have patience, and steer clear of scams, you’ll be in a good position to make the right choices.
