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Do you remember the story of Chicken Little? When an acorn fell on his head, he ran around telling everyone the sky was falling. Judging by recent headlines, quite a few Chicken Littles grew up to become finance journalists! The Year of Investing Dangerously trumpets one headline. Super Funds in a Sea Of Red screams another.
No wonder investors start to panic.

The value of the All Ords on June 30th was the worst financial year end result for 26 years.	Yes, it has been a terrible year. But superannuation is not a one year investment, and good years and bad years are not that relevant in the long run. The average return from the All Ords over the last 5 years to 30 June 2008 was 11.65% p.a., so the media hype that focuses on one year returns being so poor is out of context.
Super funds are facing uncharted territory as they prepare to announce their worst returns in more than 20 years	Uncharted? Really? Over the last 30 years there have been seven periods when the value of the Australian share market fell in value by more than 10%, and the average fall over those 7 periods was 21.2%. Despite this, shares out performed every other type of investment over the thirty year period.
In some cases, the year’s losses were likely to exceed super contributions made during the year	The earning potential and capacity for recovery of your super fund is not based on this year’s contributions, but on the cumulative value of many year’s contributions and earnings.
It is time to get out of shares and into fixed interest.	Quitting the share market now will avoid further losses, but may cost you your best chance to recover the losses of the past year when the market rebounds.

What the share market taketh away, the share market can restore. We know serious falls in the value of the Australian share market have happened before. In every single case, the market has bounced back. The losses have been recovered. The value of the underlying shares has continued to rise. The problem is that while we expect this is going to happen, we don’t know exactly when, so the only intelligent response is to sit tight.

The danger in switching out of managed share funds now is that you miss the recovery – which history tells us can happen very unexpectedly and so quickly that by the time you realise it is happening, you may have lost the chance to recoup your losses! In fact, a now famous study revealed that in the 10 years to June 2003, missing out on just the 20 best days of the Australian Share Market would have more than halved your return. Ouch!

General Advice Warning: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.

Investment Performance: Past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.

Disclaimer: We do not accept liability in connection with computer virus, data corruption, delay, interruption, unauthorised access or unauthorised amendment. This notice should not be removed.

Authorised Representatives of First Capital Financial Planning Pty Ltd. ABN: 35003212717; AFS 281193. Registered Office: 8/15 Castlereagh Street, Sydney, NSW, 2001. Postal address: GPO Box 5133, Sydney, NSW, 2001, contact details: web: www.edplan.com.au, email: info@edplan.com.au,
phone 02 9222 1202.

This email was sent by First Capital Financial Planning Pty Ltd, 8/15 Castlereagh St, Sydney, Australia 2000 to [Email]

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