Myth #3: I can avoid market volatility if I don’t invest
Reality: All investments carry some risk, but sometimes the biggest risk can be not investing at all
It’s important to recognise that all investments carry some level of risk and can go up and down over time. It’s also true that some investments, like shares, are riskier than others, which means they can change in value more, both up and down, particularly in the short term. If you put your money in the bank or in a term deposit, on the other hand, you are less likely to see big falls, but you are also less likely to see your money grow enough to keep pace with inflation either.
Keeping pace with inflation should be a key consideration for retirees. It can help maintain purchasing power during retirement and can help manage the risk that you outlive your savings. That’s why staying invested in a well-diversified portfolio can be the best option - retirees need to aim for some growth (to keep up with inflation) while at the same time not taking on too much risk to help minimise large losses if markets fall. Take a look at our case study to see how this works in practice.
If retirees stay invested in a super fund which understands what they need from their super, their investments will be managed by experts, skilled at constructing diversified portfolios of different investments with the aim of minimising risk and optimising returns over time. This can be a good way to help your savings continue to grow, but with acceptable levels of risk, throughout your retirement.