I don’t want this to happen to you

The stock market is flirting with all-time-record highs …
 
… and that’s my cue to cock my leg and pee all over your portfolio.
 
You see, I still have PTSD from the GFC, when retirees would write to me in tears as they watched their super balance crater. They had no idea how much risk they were taking in their super fund ... until it was too late.
 
I don’t want that to happen to you.
 
Here’s the problem: while the best-performing super funds label their default flagship funds as ‘balanced’ options, the reality is that they’re often quite unbalanced. They have a large portion of their funds devoted to shares and other growth investments … which juices their returns and helps them win awards.
 
In other words, if your super fund is consistently one of the top performers, it’s likely they’re taking more risks than the funds they’re competing against.
 
Now, taking on more risk is great for an 18-year-old dish pig with 50 years of work ahead of him, but it’s potentially disastrous for a 63-year-old executive chef who’s about to light the flame on his last flambé.
 
Bottom line: Australia’s biggest super funds use an aggressive ‘one-size-fits-all’ strategy which might not work if you’re nearing retirement.
 
Yet there is an alternative. They’re called ‘target-date funds’ (or ‘lifestyle funds,’ same thing), and they’re becoming more popular, with a large amount of funds offering one.
 
Here’s the gist:
 
You pick a target date fund based on your age, and it automatically adjusts your investments as you approach retirement. So, when you’re younger, it invests heavily into growth investments like shares (because you have plenty of time to ride out the ups and downs). As you age, it gradually shifts you into more conservative stuff, like cash and fixed interest.
These funds are a great hands-off option, especially if they’re built with ultra-low-cost index funds.
 
My advice?
 
Call your super fund and speak to one of their financial advisors (your first appointment should be fee-free and obligation-free). Ask them to review the asset mix you’re invested in, and have them compare it to the asset mix of an index target-date super fund for your age. Then ask them what they’d recommend, and why.
 
Tread Your Own Path!