Hi John,

Before we cover your question off, I have a couple of questions for you.

  1. Do you have a clear goal for what and when you will need to use your super?
  2. Do you know if you are on track for that goal?

If you don’t have those answers, it’s best to go back to the drawing board before spending too much time on the investment decisions. Having clear goals will enable you to link your investment decisions – like how much to contribute to super, how to invest it and also the management style you take.

There is only one non-negotiable for me, and that is, NO to switching between cash and being invested – unless you have a crystal ball!

Investing is all about time in the market, not timing the market.

One of my fundamental beliefs is this – money is like soap, the more you touch it, the smaller it gets – so make sure all the decisions and changes you make are in line with your goals and your risk tolerance. You need to invest your money in a way that will help you achieve your goals, but also won’t keep you up at night when the market goes down.

I cannot answer this without knowing more about what you are trying to achieve, your beliefs around money and also what your investment timeframe is. What I do know, is that if market volatility makes you antsy and has you checking your balance daily – it’s invested incorrectly.

If there is a conflict between what you are trying to achieve with your super and how you feel when it is going up and down, I would always err on the side of caution. I’ve seen more people hurt by being too aggressive in their investment philosophy than the other way around.

The investment option you choose (whether that be conservative, balanced, growth or high growth) will have a more significant impact on your situation than whether you decide to invest using index or active funds. There is a strong argument from both sides of the ledger regarding passive investment (like index accounts that tend to be more cost-effective) and active investment styles (that try to perform above the market but cost more).

This podcast resonates with me, but it’s not the only answer. Do your own research and seek advice!

I hope that helps, John!