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Workers worried about their superannuation’s performance have been urged to stay the course despite market jitters caused by the Iran war, with analysts warning attempts to avoid short-term losses can leave your super balance worse off in the long run.
Throughout March, the ASX plunged nearly 10 per cent before recovering last week, though investors have remained nervy over the failure of the US and Iran to reach a peace deal and US President Donald Trump’s threats to block the crucial Strait of Hormuz shipping route.
Investors often feel like they need to do something during these bumpy times, says James Gruber, CommSec equity market strategist, but they may end up being decisions you regret later. Instead of reacting in the heat of the moment in volatile markets, it may be best to take a deep breath and do nothing for a day, week or month, he says.
“The problem is that abrupt, emotional decisions often lead to poor outcomes. Take the time to make a rational, informed decision,” Gruber says.
Matt Linden, executive general manager, strategy and insights at the Super Members Council (SMC) agrees workers often contemplate whether an imminent market downturn is the right time to switch investment options to limit losses.
For most working super fund members, he reinforces recent market movements will have little impact over the medium to longer term.
Analysis by the SMC shows that in the worst case, for someone with a $100,000 balance, switching to cash during the market downturns seen during the COVID pandemic could have left them about $50,000 worse off over five years.
During the more recent 2025 Trump tariff episode, someone switching to cash could be about $7000 worse off in just a year.
“News headlines warning about stock drops and shaky equity markets can prompt workers to consider switching their superannuation investments to cash,” he says.
“When markets fall, the temptation to switch your super to conservative investment options like cash can be overwhelming, but it would mean you potentially lock in the losses and miss the recovery.”
“Evidence suggests this typically makes you worse off – both individual and institutional investors have a poor track record of market timing, and switching to cash risks the sharp recoveries that often follow declines.”
The analysis also found that superannuation fund declines during the global financial crisis and COVID were less than a third of those of major equity markets. Funds also recovered to pre-GFC highs more than a year earlier than the Australian stock market.
“For current retirees or pre-retirees heading towards retirement soon, money that remains in super for many years enables short-term losses to balances to bounce back,” Linden says.
Linden advises people to stay the course, reminding workers super is diversified, which smooths out market volatility.
“The superannuation system is designed to grow retirement savings long-term even as local and global share markets experience increased volatility due to geopolitical tensions,” he says. “That means all of your eggs aren’t in the share market basket but spread across a range of really high-quality underlying investments and assets across geographies and sectors.”
Past share market corrections have typically been 2½ times the magnitude of what occurs within superannuation, he says.
“When funds have tracked members who try [to] time the market, the vast majority are often financially worse off.”
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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