During a market downturn, you might be tempted to switch your super away from riskier investments, like shares, and into safer ones. But is it better to switch or

What you need to consider

When it comes to investing and super, everyone has a different comfort level in terms of how much risk you’re willing to accept. It depends on your financial situation, goals, stage of life, and even your personality.

That’s why, when markets fall, everyone reacts differently. While some are quick to get out of the share market, others are content to ride out short-term fluctuations because they’re confident that markets will recover over the long term.

If short-term movements in your super balance are making you nervous, and you’re wondering whether you should switch into less-risky investments, there are a few things you should consider before you do anything.

Why switching isn’t always a good idea

Between February and March 2020, at the start of the Coronavirus pandemic, there was a significant market downturn. With so much uncertainty around, some people were worried about what the pandemic would do to their super balance, so they switched away from shares and into less-risky investments.

Research revealed that the amount of people switching investments was three times higher than usual. But when the markets picked up again, the risk was that these people missed out on the recovery. Over 70% of the switches done between March and April 2020 produced negative outcomes. These people would have been better off if they had stayed with their initial investments and done nothing.1

While that won’t always be the outcome, it’s an important reminder that markets can recover as quickly as they fall. That’s why any changes to your super strategy should be part of a long-term plan rather than a short-term reaction. Switching can be costly if you don’t do it for the right reasons.

What happens when you switch investments?

Let’s say you switch your super by moving away from a Growth portfolio, which has a high allocation to Australian and international shares, and into a Conservative portfolio, which has a high allocation to cash and fixed interest.

When you sell out of an investment while its value is down, you lock in its current price, which makes your losses real and irreversible. But if you stay invested, its value could increase again without you having to do anything.

The importance of diversification

A diverse investment portfolio spreads your risk exposure across different asset classes and markets, rather than putting all your eggs in one basket. This means if one asset class declines in value, other asset classes may experience higher returns and act as a financial buffer.

For example, if your super is invested across several asset classes – like Australian and international equities, fixed interest, bonds and cash – it’s likely to withstand a market downturn better than if you only invested in one of these types of asset classes. That’s why diversification is an important part of any long-term investment strategy.

If you’re tempted to switch investments or change your investment strategy, chat to Bluerocke Investment Advisors first. We can help you work out if it’s the right move for you at the right time.

We’re here to help

As you keep your long-term goals top of mind, remember: we are here to help – with news, insights and helpful resources available on our website to  keep you up-to-date.

DEV SARKER DIRECTOR

Authorized Representative

FCA, MBA, ADFP

p 1300 71 71 36 | m +614 0416 7989

Key takeaways

• There are three types of aged care which range from the ability to live independently or in supplemented accommodation
• If your relative wants to apply for Government subsidies to move into an aged care, they must be assessed by a member of the Aged Care Assessment Team (ACAT)
• You may be required to pay fees in a Government subsidised aged care home, so it’s important to work out the costs.

While there is a strong preference among older Australians to live at home for as long as they can¹, there may come a time when they need to move into aged care.

This isn’t an easy decision though— there’s a raft of emotional issues, in addition to financial considerations.

In this article we look at the process to move into aged care and the different types of care available.

Types of aged care

There are three main types of aged care.

Help at home: if your relative prefers to live independently, they can receive care at their home (or a retirement village) when needed. This may include help with personal care needs such as showering and cooking meals, medical care, or other domestic support, such as home maintenance.

Short term care: may be required after a hospital stay or if the regular carer is taking a holiday

Aged care home: supplemented accommodation with 24-hour care available. Can be short term or permanent.

Moving into aged care: the process

If your relative decides moving into aged care is the right move, there are steps required to get the process in motion.

1. Have their needs assessed

To be eligible for Government subsidies, a person must be assessed by a member of the Aged Care Assessment Team (ACAT). This assessment is free and can be done at home, a health centre or hospital.

The ACAT member will ask them a series of questions about their health, mobility and any help that they currently receive at home, to determine whether residential aged care is required based on their needs

2. Find an aged care home

Once ACAT approval is received, you can start looking for relevant accommodation. When evaluating aged care home options, it’s worth contacting a selection of providers to get a better comparison.

If you’re unsure about the facilities and rooms available in a particular area, you can find out more information by visiting myagedcare.gov.au.

It may be beneficial to have a list of questions prepared to ensure you receive the information you need.

These questions may include:

• What kinds of recreational activities are offered?
• Are the available rooms shared or single rooms, and is there a private ensuite?
• What types of other services are regularly provided (such as physio or hairdressing services for example)
• What food and beverage options are available?
• Will your relative have access to a phone, internet or mobile phone to contact you?
• Ask to see a brief report of the Health and Safety report. This is a good indicator with regards to, not only incidents that have taken place, but also incidents against residents and incidents of residents against staff.

Understanding your rights and responsibilities as well as those of the service provider will help you make an informed decision and get the best quality care to suit your relative’s needs.

3. Work out the costs of moving into aged care

There are a number of fees that may be payable in a Government subsidised aged care home. Some of these fees are fixed and others depend on your relative’s financial circumstances. Government subsidies may also be available.

Here’s a general summary of what your relative could be liable for:

4. Apply for an aged home

Generally, multiple applications can be submitted when applying for an aged care home and you may have the ability to be placed on a waiting list.

You will be asked if you want to provide details of your relative’s income and assets but you are not legally required to disclose this.

5. Moving your relative into aged care

Just before they move in, you’ll be provided with an Accommodation Agreement. This is a legal document which sets out the terms of the residency as well as rights and responsibilities for your relative and for the aged care facility. You may want to consider seeking legal advice before signing it.

When your relative does move into an aged care home, don’t forget to notify Services Australia (Centrelink) about their new living situation and any other change in circumstances (e.g. sale of their home, assets used to pay lump sum costs).

Source: MLC https://www.mlc.com.au/personal/blog/2021/06/moving-a-loved-one-into-an-aged-care-home

If you have questions and would like your financial situation to be evaluated, please email us on ds@bluerocke.com with your contacts, for an exploratory meeting, at our cost, not yours.

Dear All

Our office will be closed from end of day on Wednesday 22 December 2021 and will re-open on Thursday 6 January 2022.

From all of us here at BlueRocke Investment Advisors, we thank you for your support and we wish you and your families a safe and Merry Christmas followed by a Happy New Year!

As mentioned below, if any urgent matters crop up during the holiday season, please email Dev with the caption “URGENT” in the subject line and these will be attended to.

To our clients celebrating Lunar New Year,

A very Happy New and Prosperous New Year to all of you and your loved ones in this Year of the Ox!

From, the BlueRocke team.

Dear All

It has been a historic year with positives and not so positives – with Middle East peace accords, dropping oil prices, lowering loan interest rates, easing video conferencing, reducing infection rates, generous government subsidies and budget blowouts, regional geopolitical changes, trade policy tensions etc. None of us would have thought all this was possible, in a single year.

But it appears we are rounding the bend. Markets have picked up and long term investments strategies are holding up well, sporting events are back and we are all still standing!

As 2020 comes to a close, we wanted to sincerely thank you for all of your support.

We hope that you have a wonderful CHRISTmas break, filled with peace, rest,  laughter, joy and happiness with your near and dear ones.  We look forward to catching up again in the New Year.

As mentioned below, if any urgent matters crop up, please email me with the caption “URGENT” in the subject line and I will attend to it.

Kind regards, Dev.

New year is a great time for making lifestyle changes, however, for resolutions affecting your financial health, there’s often no better time than when starting a new job.