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How to maximise superannuation in market dips | Ask An Advisor

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Equity Mates & Bryce Leske
August 23, 2023

Ask An Advisor

Hello and welcome back to Ask An Advisor.

We hope your week is going well. Thanks for all of the questions coming in, they’ve been great, and we will get our advisors to answer them all!

Over on Equity Mates Investing Podcast we have a monthly episode with one advisor answering many of your questions.

Today’s episode was a cracker, we learnt so much - ‘Cost of advice, best platforms, topping up super & pay off mortgage or invest more with Glen Hare’.

- Bryce and Alec

The week’s question

“Can I time my superannuation contribution when the market is down?”

- Alan Macleod

This week’s advice

This week’s advisor is Andy Darroch, from Independent Wealth Advice. Here’s what he said in response to Alan’s question:

Yes, you absolutely can time contributions to super with market movements. Although, it’s not as simple or nimble as investing outside of super.

Generally, for good industry funds, your money will be treated as having been invested the day it hits the fund’s bank account. With BPAY for instance, it’s typically within 24 – 72 hours of sending the funds (factoring weekends etc). You also need to ensure that your “new contributions” are setup to be invested right away, which is the default setting for any good industry fund.

Now with timing contributions, you won’t have any control over your employer contributions (e.g. the 11% paid by your employer direct to your fund), but you do control any ‘voluntary contributions’, e.g. contributing your personal cash. In this case, you absolutely can “time” contributions for when the market is down.

You can also utilise dollar cost averaging for voluntary contributions and invest incrementally rather than making a single large contribution. If you’re in a good fund, this shouldn’t cause any major headaches or unnecessary fees.

Let’s remember superannuation is an ultra long-term investment with a long time horizon. Industry super funds are about the only example worldwide where everyday investors can get cutting edge exposure to things like private equity, infrastructure and unlisted property.

Yes, these assets aren’t as useful for opportunistic top ups, but they are incredibly well suited for delivering outstanding long term returns, reducing volatility and providing income in retirement.

About Andy

Andy is an Independent Financial Advisor & Director of Independent Wealth Advice.

Despite having the usual and very uninteresting qualifications of CFP®, B Bus (Acc), Dip FP, SMSF Specialist, MCFIAA as well as having been fortunate enough to work at Macquarie Private Bank and 125-year-old stockbroker Wilsons, the only really thing that matters is providing independent, honest advice, which places clients first, rather than fees, or bonuses, or banks.

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