1 00:00:05,440 --> 00:00:08,200 Sean Aylmer: Welcome to the Fear and Greed business Interview. I'm Sean Aylmer. 2 00:00:08,320 --> 00:00:11,320 Sean Aylmer: The Australian share market has had its worst start to 3 00:00:11,360 --> 00:00:14,320 Sean Aylmer: a year since COVID, with the benchmark index off nearly 4 00:00:14,360 --> 00:00:17,760 Sean Aylmer: four percent across the March quarter. Not since twenty twenty 5 00:00:17,800 --> 00:00:20,240 Sean Aylmer: has the share market had as bad a quarter, which 6 00:00:20,239 --> 00:00:23,239 Sean Aylmer: means many of our superannuation accounts won't look so good 7 00:00:23,280 --> 00:00:25,720 Sean Aylmer: when we check the latest statement. How do you weather 8 00:00:25,800 --> 00:00:28,880 Sean Aylmer: the volatility as a super investor? The information in this 9 00:00:28,920 --> 00:00:31,440 Sean Aylmer: episode is general in nature and doesn't take into account 10 00:00:31,480 --> 00:00:34,360 Sean Aylmer: your own circumstances. You should always do your own research 11 00:00:34,440 --> 00:00:38,879 Sean Aylmer: and seek professional advice before making investment decisions. Annika Bradley 12 00:00:39,000 --> 00:00:42,599 Sean Aylmer: is an investment specialist at UniSuper. Annika, welcome to Fear 13 00:00:42,640 --> 00:00:43,000 Sean Aylmer: and Greed. 14 00:00:43,800 --> 00:00:45,959 Annika Bradley: Thanks Sean, really appreciate you having me. 15 00:00:46,000 --> 00:00:48,080 Sean Aylmer: So, tt hasn't been a great start to the year 16 00:00:48,159 --> 00:00:50,600 Sean Aylmer: in terms of equities, at least in both here and 17 00:00:50,720 --> 00:00:51,280 Sean Aylmer: Wall Street. 18 00:00:51,680 --> 00:00:54,320 Annika Bradley: No, it hasn't. We have seen quite a lot of 19 00:00:54,360 --> 00:00:58,440 Annika Bradley: market volatility. In fact, from about mid February through to 20 00:00:58,720 --> 00:01:02,200 Annika Bradley: mid March we saw markets sell off around ten percent, 21 00:01:02,280 --> 00:01:05,920 Annika Bradley: so into that technical correction territory, I have retraced a 22 00:01:05,920 --> 00:01:09,760 Annika Bradley: little bit since then, but certainly volatility is an ongoing theme. 23 00:01:10,280 --> 00:01:14,520 Sean Aylmer: What should investors do? Don't panic? Number one, But after 24 00:01:14,560 --> 00:01:16,520 Sean Aylmer: they've stopped panicking, what should they do? 25 00:01:17,600 --> 00:01:20,920 Annika Bradley: Well, We've seen in the last couple of weeks switching 26 00:01:20,959 --> 00:01:25,240 Annika Bradley: activity pick up, so we are seeing some members moving 27 00:01:25,319 --> 00:01:29,280 Annika Bradley: from those higher growth options into low growth options in 28 00:01:29,360 --> 00:01:32,960 Annika Bradley: response to the market volatility. So I would say there 29 00:01:32,959 --> 00:01:35,640 Annika Bradley: are four tips that come to mind in terms of 30 00:01:35,640 --> 00:01:39,440 Annika Bradley: what to do during volatile markets, and the first is 31 00:01:39,800 --> 00:01:43,800 Annika Bradley: really know your why. So Simon Sinex, start with the why, 32 00:01:44,440 --> 00:01:47,200 Annika Bradley: know why you're invested as are super anuent and obviously 33 00:01:47,280 --> 00:01:50,960 Annika Bradley: great retirement outcomes of what we want for all Australians 34 00:01:50,960 --> 00:01:54,840 Annika Bradley: in retirement. So keeping that in perspective I think helps 35 00:01:54,840 --> 00:01:57,080 Annika Bradley: you stay the course and as you say, not to 36 00:01:57,120 --> 00:02:01,040 Annika Bradley: panic during these periods of market volatility. The second thing 37 00:02:01,160 --> 00:02:04,720 Annika Bradley: is know your time frame. So great retirement outcomes are 38 00:02:04,720 --> 00:02:08,160 Annika Bradley: not built over days, they're built over decades, and keeping 39 00:02:08,160 --> 00:02:11,960 Annika Bradley: that really long term investment time horizon in mind I 40 00:02:12,000 --> 00:02:15,920 Annika Bradley: think is particularly helpful during these periods. It sounds nerdy 41 00:02:16,080 --> 00:02:18,960 Annika Bradley: and for all the lawyers listening in. Past performance is 42 00:02:18,960 --> 00:02:22,080 Annika Bradley: definitely not an indicator of future performance, but I think 43 00:02:22,200 --> 00:02:24,640 Annika Bradley: just revisiting history and having a look at some of 44 00:02:24,639 --> 00:02:27,400 Annika Bradley: those really long term charts to give you the perspective 45 00:02:27,440 --> 00:02:30,360 Annika Bradley: of what markets have done over long periods of time 46 00:02:30,480 --> 00:02:34,760 Annika Bradley: can be really helpful to just reorientate your expectations as 47 00:02:34,919 --> 00:02:38,160 Annika Bradley: markets are moving around so much. The third is know 48 00:02:38,280 --> 00:02:41,720 Annika Bradley: the costs of switching behavior. So we've done some hypothetical 49 00:02:41,720 --> 00:02:44,920 Annika Bradley: examples just to help our members understand how much it 50 00:02:44,919 --> 00:02:48,480 Annika Bradley: could potentially cost you. And the fourth is don't look 51 00:02:48,680 --> 00:02:52,280 Annika Bradley: that sounds so silly, but if you are prone to switching, 52 00:02:52,360 --> 00:02:55,840 Annika Bradley: and in this case, past behavior is a reasonable indicator 53 00:02:55,840 --> 00:02:59,560 Annika Bradley: according to the research on future behavior, So past switching 54 00:02:59,600 --> 00:03:03,480 Annika Bradley: behavior does make you a little more susceptible to switching 55 00:03:03,560 --> 00:03:06,320 Annika Bradley: at the moment, simply don't log in and don't look 56 00:03:06,360 --> 00:03:09,519 Annika Bradley: at your super account balance. You know, the industry talks 57 00:03:09,560 --> 00:03:14,200 Annika Bradley: about engagement, but I think engagement is really knowing how 58 00:03:14,240 --> 00:03:18,480 Annika Bradley: to grow you super by understanding your investment strategy, staying 59 00:03:18,520 --> 00:03:21,760 Annika Bradley: the course, seeking professional advice when you need it, not 60 00:03:21,800 --> 00:03:25,280 Annika Bradley: necessarily logging in every day to see what's happening in markets. 61 00:03:25,639 --> 00:03:28,200 Sean Aylmer: So the investment strategy, and you said there has been 62 00:03:28,240 --> 00:03:32,919 Sean Aylmer: switching from more aggressive growth options presumably to less aggressive 63 00:03:32,919 --> 00:03:36,760 Sean Aylmer: growth options or balanced options A Nika, How should people? 64 00:03:37,080 --> 00:03:39,240 Sean Aylmer: I wonder if you have a long term strategy and 65 00:03:39,280 --> 00:03:41,280 Sean Aylmer: you're a thirty five year old versus fifty five year 66 00:03:41,320 --> 00:03:44,200 Sean Aylmer: old versus sixty year old, all that's going to be different, 67 00:03:44,240 --> 00:03:44,640 Sean Aylmer: isn't it. 68 00:03:45,280 --> 00:03:48,800 Annika Bradley: Yeah. Absolutely, And in terms of setting your investment strategy, 69 00:03:48,800 --> 00:03:51,240 Annika Bradley: I'd say that is one thing to spend a lot 70 00:03:51,240 --> 00:03:53,120 Annika Bradley: of time on and really get that right. And as 71 00:03:53,120 --> 00:03:55,240 Annika Bradley: you say, if you are thirty five and you've got 72 00:03:55,240 --> 00:03:59,800 Annika Bradley: a forty fifty year time horizon, that is different to 73 00:04:00,000 --> 00:04:04,120 Annika Bradley: one who is sixty five and has a still potentially 74 00:04:04,160 --> 00:04:06,840 Annika Bradley: thirty year, twenty year to thirty year time horizon. But 75 00:04:06,920 --> 00:04:09,760 Annika Bradley: it is really important to get that time horizon right. 76 00:04:09,920 --> 00:04:13,320 Sean Aylmer: Okay. So I mean, let's talk about a diversification and portfolio. 77 00:04:13,360 --> 00:04:16,240 Sean Aylmer: So when we hear that Wall Street's gone down seven 78 00:04:16,320 --> 00:04:19,120 Sean Aylmer: or eight percent, the local markets down four percent of 79 00:04:19,200 --> 00:04:22,680 Sean Aylmer: the last quarter, mostly have a diversified portfolio, so you're 80 00:04:22,680 --> 00:04:26,920 Sean Aylmer: not just in equities. There can be offsets in other 81 00:04:27,000 --> 00:04:27,840 Sean Aylmer: asset classes. 82 00:04:28,120 --> 00:04:31,440 Annika Bradley: Yeah, absolutely, And I think when you are thinking about 83 00:04:31,480 --> 00:04:36,200 Annika Bradley: setting that investment strategy, there are many great diversified options 84 00:04:36,560 --> 00:04:40,240 Annika Bradley: available to you, and I think for many Australians those 85 00:04:40,240 --> 00:04:43,880 Annika Bradley: diversified options are a great choice. As you say, they've 86 00:04:43,920 --> 00:04:47,680 Annika Bradley: got different asset classes within those options that can help 87 00:04:48,400 --> 00:04:52,040 Annika Bradley: smooth those market ups and downs a little bit. And 88 00:04:52,120 --> 00:04:55,839 Annika Bradley: also we think of them as a great risk management strategy. 89 00:04:55,960 --> 00:05:00,560 Annika Bradley: So if you are trying to avoid significant permanent capital 90 00:05:00,600 --> 00:05:04,360 Annika Bradley: losses and picking a stock that potentially goes bankrupt, I'm 91 00:05:04,360 --> 00:05:07,800 Annika Bradley: thinking potentially God frees. If that's one hundred percent of 92 00:05:07,800 --> 00:05:11,520 Annika Bradley: your superannuation and that does file for bankruptcy, you know 93 00:05:11,560 --> 00:05:13,960 Annika Bradley: suddenly you're in a position where you're wiped out. Whereas 94 00:05:13,960 --> 00:05:17,320 Annika Bradley: many of those diverse fied options hold hundreds of securities 95 00:05:17,760 --> 00:05:20,960 Annika Bradley: that possibly the biggest weight is three or four percent, 96 00:05:21,040 --> 00:05:24,600 Annika Bradley: and if one of those stocks files for bankruptcy, then 97 00:05:25,000 --> 00:05:28,080 Annika Bradley: you've really protected the majority of your portfolio. Not a 98 00:05:28,080 --> 00:05:32,160 Annika Bradley: great outcome still, but we think diversifications a very important 99 00:05:32,240 --> 00:05:33,480 Annika Bradley: risk management strategy. 100 00:05:33,960 --> 00:05:35,480 Sean Aylmer: Stay with me and Nika, we will be back in 101 00:05:35,520 --> 00:05:45,040 Sean Aylmer: a minute. I guess this morning is Anika Bradley from 102 00:05:45,320 --> 00:05:50,440 Sean Aylmer: Uni Souper So financial advice? How important is it at 103 00:05:50,480 --> 00:05:51,320 Sean Aylmer: times like this? 104 00:05:52,560 --> 00:05:56,760 Annika Bradley: I think financial advice is really important and there are 105 00:05:57,400 --> 00:06:01,360 Annika Bradley: many ways you can get financial advice that be a 106 00:06:01,360 --> 00:06:04,279 Annika Bradley: phone call to your super fund or more comprehensive advice 107 00:06:04,880 --> 00:06:08,880 Annika Bradley: sitting down with an advisor. During these periods, it's often 108 00:06:09,000 --> 00:06:12,520 Annika Bradley: just comforting to pick up the phone and make sure 109 00:06:12,520 --> 00:06:15,159 Annika Bradley: that you're on track, or check in with some of 110 00:06:15,160 --> 00:06:18,039 Annika Bradley: the resources online, as I said, to remind yourself of 111 00:06:18,080 --> 00:06:21,560 Annika Bradley: how markets do over the long term. So I think 112 00:06:21,600 --> 00:06:25,480 Annika Bradley: financial advice is a really important part of growing your 113 00:06:25,680 --> 00:06:27,000 Annika Bradley: super overtime. 114 00:06:26,800 --> 00:06:29,440 Sean Aylmer: And you can call your super fund for that. I 115 00:06:29,480 --> 00:06:31,960 Sean Aylmer: never think of my super fund as an advisor, and 116 00:06:32,120 --> 00:06:34,800 Sean Aylmer: I appreciate it's probably general advice, not specific advice, but 117 00:06:34,839 --> 00:06:35,400 Sean Aylmer: you can do that. 118 00:06:35,880 --> 00:06:38,520 Annika Bradley: Yes, yeah, there are our member center waiting to take 119 00:06:38,560 --> 00:06:38,880 Annika Bradley: your call. 120 00:06:38,920 --> 00:06:43,640 Sean Aylmer: Shop right, Okay, what about when you're coming if you've 121 00:06:43,680 --> 00:06:47,600 Sean Aylmer: been through the accumulation stage and you're retiring, maybe you're 122 00:06:47,640 --> 00:06:51,760 Sean Aylmer: at the decumulation stage at the beginning of that process. Anyway, 123 00:06:52,320 --> 00:06:56,080 Sean Aylmer: is the advice any different in terms of sort of 124 00:06:56,080 --> 00:06:57,799 Sean Aylmer: seeing through volatile times? 125 00:06:58,440 --> 00:07:00,880 Annika Bradley: So, as I said earlier, I think as your time 126 00:07:00,920 --> 00:07:05,479 Annika Bradley: horizon changes and your circumstances change, and everyone is different, 127 00:07:06,040 --> 00:07:10,640 Annika Bradley: Certainly your investment strategy does evolve as you age. So 128 00:07:10,880 --> 00:07:15,600 Annika Bradley: as you're moving from accumulation into that decumulation phase, that's 129 00:07:15,880 --> 00:07:19,400 Annika Bradley: a really good opportunity to check in on your investment 130 00:07:19,440 --> 00:07:22,480 Annika Bradley: strategy and make sure it's appropriate as you begin to 131 00:07:22,600 --> 00:07:24,239 Annika Bradley: draw down on your super. 132 00:07:24,760 --> 00:07:27,400 Sean Aylmer: And this isn't specific advice. We sort of hasting to 133 00:07:27,440 --> 00:07:29,640 Sean Aylmer: add that to listeners. But what are you talking about. 134 00:07:29,720 --> 00:07:33,240 Sean Aylmer: Does that mean going more into fixed income cash and 135 00:07:33,280 --> 00:07:36,800 Sean Aylmer: potentially not being as heavy into equity as that type 136 00:07:36,800 --> 00:07:37,040 Sean Aylmer: of thing. 137 00:07:37,320 --> 00:07:40,560 Annika Bradley: Yeah, So potentially, as you say dialing down your risk 138 00:07:40,960 --> 00:07:44,560 Annika Bradley: a little bit, I would emphasize that even at sixty five, 139 00:07:45,040 --> 00:07:48,120 Annika Bradley: you could still have twenty thirty years ahead of you, 140 00:07:48,280 --> 00:07:51,120 Annika Bradley: So you want to be careful in terms of how 141 00:07:51,200 --> 00:07:53,880 Annika Bradley: much risk you still need to take to be able 142 00:07:53,920 --> 00:07:59,440 Annika Bradley: to generate that retirement that you'd like. There are other 143 00:07:59,480 --> 00:08:02,920 Annika Bradley: considerations as you're as you're hitting retirement, some people decide 144 00:08:02,960 --> 00:08:05,239 Annika Bradley: that they want to use their superannuation or a portion 145 00:08:05,280 --> 00:08:08,520 Annika Bradley: of their superannuation to say, pay off their mortgage. And 146 00:08:08,600 --> 00:08:10,680 Annika Bradley: at that point, if you're going to use a significant 147 00:08:10,680 --> 00:08:15,480 Annika Bradley: portion of your superannuation, then working out how far in 148 00:08:15,520 --> 00:08:19,920 Annika Bradley: advance you know you want to effectively ring fence that 149 00:08:20,000 --> 00:08:24,040 Annika Bradley: amount of your super anticipating that particular cash flow. 150 00:08:24,760 --> 00:08:26,840 Sean Aylmer: At the moment, we are all scared of tariffs and 151 00:08:26,960 --> 00:08:30,440 Sean Aylmer: global turmoil. When whether I'm a thirty five year old 152 00:08:30,520 --> 00:08:32,360 Sean Aylmer: or sixty five year old in our examples that I've 153 00:08:32,360 --> 00:08:35,040 Sean Aylmer: been talking through this morning. Should I be worried about 154 00:08:35,080 --> 00:08:37,640 Sean Aylmer: tariff's or is it just something that comes and goes. 155 00:08:37,960 --> 00:08:41,280 Annika Bradley: Look, I think market volatility comes and goes, whether it's 156 00:08:41,480 --> 00:08:46,520 Annika Bradley: tariffs or a pandemic or the global financial crisis. This 157 00:08:46,640 --> 00:08:49,840 Annika Bradley: is nothing new to markets. Markets hate uncertainty. I think 158 00:08:49,880 --> 00:08:52,679 Annika Bradley: you and Michael stress that often on the podcast, and 159 00:08:52,920 --> 00:08:56,280 Annika Bradley: this is a situation where markets are just really not 160 00:08:56,400 --> 00:08:59,400 Annika Bradley: responding well to the current levels of uncertainty. 161 00:09:00,280 --> 00:09:01,600 Sean Aylmer: Thank you for talking to Fear and Greed. 162 00:09:01,840 --> 00:09:02,439 Annika Bradley: Thank you, Sean. 163 00:09:02,760 --> 00:09:06,200 Sean Aylmer: That was Annika Bradley, investment specialist at UniSuper. This is 164 00:09:06,240 --> 00:09:08,520 Sean Aylmer: the Fear and Greed Business Interview. Remember this is general 165 00:09:08,520 --> 00:09:11,520 Sean Aylmer: information only, and you should seek professional advice before making 166 00:09:11,559 --> 00:09:14,840 Sean Aylmer: investment decisions. Join us every morning for the full episode 167 00:09:14,880 --> 00:09:17,320 Sean Aylmer: of Fear and Greed daily business news for people who 168 00:09:17,400 --> 00:09:20,920 Sean Aylmer: make their own decisions. I'm Sean Aylmer. Enjoy your day.