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Should I change my fund to capital guarded or cash-management?

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I am with FSS fund-balanced option, and planning to retire. Since I have not much money in the fund, I am worried I might lose a lot of money again as before, but was told by my finance adviser to wait for a month. I want to change my fund to capital guarded or cash-management. What do you think?

Please note that as I don’t know your full circumstances, this is not personal financial advice.

You’re caught between three nagging super issues. First, you say that you don’t have much in super and ideally you would want to build up your funds before you retire.

Second, you say you want to retire, and I presume that means sooner rather than later, which means we haven’t got much time to build up your fund.

Third, you’re sick of losing money at the hands of the stock market and want to go to a safer option, such as cash, but that will only give you five to six per cent and so after inflation of over three per cent, it might mean your fund would only grow by about two to three per cent in real terms.

It might be an idea in the short-term to take the safe option until the stock market has thrown off all of this fear that has created these sell-offs. If you were in your late 40s or early 50s and you wanted to retire at 65, I would say stay with the growth option and be prepared to be exposed over this year and next, but then I would expect a good year for the stock market and your fund.

Guessing the stock market is hard, and I would prefer you to stay in a good super fund, say in a balanced option but as you are quite scared right now, you might think about going to the capital guarded or cash option until the volatile times for the stock market are over.

One final thing – I reckon we will see a big rally in shares later this year but sell-offs could happen next year. Eventually the stock market will break to the high side and keep rising for a sustained period but it could take a year or two! But, as I said in the beginning, this is not personal financial advice and you should speak with your financial adviser as they should know your full circumstances.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Thursday, September 08, 2011

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