Ahead of the outbreak of war in 1939, Britain’s Ministry of Information produced a poster with the wartime slogan ‘Keep Calm and Carry On’.
While it was never released nor found until it surfaced on a bookshelf in Northumberland in 2000 – due to its original intent of offering reassurance in the event of Germany invading Britain – the latent Victorian-era stoicism in the message is popular in times of adversity and uncertainty.
It is message that resonates at a time when the conflict in the Middle East continues to destabilise the world, leaving destruction, pushing up inflation, forcing nations to take drastic measures to protect fuel supply and causing severe turbulence in markets.
Periods of geopolitical instability understandably cause concern for Australians watching devastating images on the news and sharp market movements.
Unsurprisingly, market downturns prompt a familiar question for super members: should I switch my investment option to something more conservative, like cash?
The evidence is both clear — and may feel counter‑intuitive. Switching during market downturns typically leaves people worse off in the long run.
Australia’s profit‑to‑member super funds are deliberately designed to absorb volatility. With diversified portfolios spanning equities, bonds, infrastructure, property and other real assets, super fund declines during the Global Financial Crisis (GFC) and the COVID‑19 crash were less than a third of those suffered by major share markets. They also recovered faster — and in the case of the GFC returned to pre‑GFC highs more than a year earlier than the Australian share market.
Yet volatility can still tempt reactive decisions. History shows that both individual and institutional investors have a poor track record of market timing. Switching to cash after markets have already fallen, risks missing the sharp recoveries that often follow.
SMC analysis underscores the cost of getting this wrong. In the worst case, a member with a $100,000 balance who switched to cash at the COVID‑19 market trough could have been around $50,000 worse off over the following five years. Even during the shorter‑lived 2025 tariff episode, switching to cash at the bottom could have left someone around $7,000 worse off in just one year.
Compulsory contributions and preservation give professional investment teams the ability to ride out short‑term market shocks and stay invested through recoveries. Income streams such as dividends and infrastructure cash flow, play a crucial role in rebuilding balances after downturns.
For retirees, the system’s resilience is reinforced by the Age Pension, payments from which can rise automatically when super balances fall, helping stabilise incomes during market stress.
Markets will always go through cycles, but in the more volatile moments, the lesson remains consistent when it comes to your super: Think long-term, Keep Calm and Carry on.
