Syria and your super
If you’ve been following the news in recent days, you would have heard about the United States’ military action in Syria.
The US missile strikes on a Syrian airfield is just the latest event in the ongoing tragedy of the civil war in that country.
Some reports have suggested the Syrian conflict could trigger a worldwide economic downturn, or prompt a global sharemarket collapse.
So what do the growing tensions in the Middle East mean for LGIAsuper members?
What will happen to my super?
Financial markets sometimes drop sharply on reports of armed conflict between nations.
That’s not always the case; last week, the US and European share markets hardly moved on news of the air strikes.
When share markets do drop in the wake of bad news, they often rebound quickly.
In fact the US share market rose more than 30% in the year following the 2003 Iraq war1.
And financial markets, including property, shares and fixed interest, have endured tough times before and recovered.
Since the year 2000 alone, we’ve had the dotcom crash, the SARS outbreak, the Global Financial Crisis, the World Trade Centre attacks and a series of conflicts in the Middle East.
Yet many share markets are currently trading near record highs.
Strength in diversity
LGIAsuper manages over $10 billion in funds on behalf of our members.
That financial strength, together with our experience guiding our members through difficult financial times, made us one of Australia’s best-performing funds during the GFC2.
Our investments span Australian and international shares, property and infrastructure.
We also hold funds in cash and fixed interest.
Due to that diversification, the vast majority of the funds entrusted to us aren’t directly affected by the events in Syria.
That doesn’t mean we aren’t following what’s happening in Syria closely.
Should I switch my investment to a safer option?
It’s likely that the Syrian conflict may create more volatility, or short-term fluctuations in value, in some LGIAsuper options.
That may affect you if you’ve chosen the Australian or International shares option, or one of our ready-made funds.
The trade-off for that volatility is that over time, growth assets like shares and property outperform more conservative investments, like cash and fixed interest.
That’s been the pattern for decades; through war, famine and crisis.
What should I do next?
Making financial decisions based on what you hear on the nightly news is never a good strategy.
Super’s for the long-term. Although you might be concerned about events overseas, that doesn’t mean you need to change your retirement plans. After all, unless you’re close to retirement, it could be years (or even decades!) before you need to access your super.
Although there will be some bumps along the way, LGIAsuper is committed to growing your retirement savings, and partnering with you so you can enjoy a comfortable retirement.