Managing your SMSF in a downturn

Talk of recession and stagflation refuses to go away, ignited by each new geopolitical crisis and share market gyration. From Covid to the war in Ukraine and, most recently, the US-Israeli war with Iran, investors are facing prolonged periods of nail-biting volatility and uncertainty.

Economic labels aside, the consensus from the (northern) spring meetings of the International Monetary Fund (IMF) and the World Bank, and echoed by market economists, is that higher inflation and lower growth are the new reality. Some countries may be better placed than others, but none can escape the global headwinds.

The challenge for all super fund members is to learn how to navigate the new normal, rather than react in a panic or do nothing and hope it goes away. For self-managed super fund (SMSF) trustees, there is an additional layer of responsibility.

One reason people sign on to run their own super fund is to take control of their financial destiny. Rather than leave investment decisions to professionals, SMSF trustees are ultimately responsible for their own investment strategy and are required to document it. While that means they are generally more engaged with their super, it doesn’t mean your investment strategy is ‘set and forget’. 

To plan for changing market conditions, you need to know what you’re planning for. So first, some definitions.