Every time markets dip, the same question rises to the surface: Should I move my superannuation to cash before things get worse?
It’s a natural reaction. Watching balances fluctuate can be uncomfortable. But superannuation was never designed for short-term comfort — it was designed for long-term growth. The old saying remains true: it’s time in the market, not timing the market, that builds wealth.
Since compulsory superannuation began in Australia in July 1992 (source treasury.gov.au) , investors have lived through multiple major downturns — including the Asian Financial Crisis, the Global Financial Crisis, the COVID crash, and other periods of volatility. Yet over the long term, diversified growth investments have historically delivered significantly stronger returns than cash.
Markets fall. Markets recover. That cycle has repeated for more than a century.
The danger isn’t volatility — it’s panic.
When investors switch to cash after markets fall, they often lock in losses and risk missing the rebound. Some of the strongest market recovery days occur shortly after the worst declines. If you’re sitting in cash during that rebound, the damage can be permanent.
Before making a costly switch, here are five critical questions to ask yourself.
- What Is My Actual Timeframe?
Are you 35 years from retirement? 15? Or already drawing income?
If retirement is still years away, short-term volatility may be largely irrelevant. Superannuation is a long-term vehicle. Growth assets fluctuate in the short term but have historically rewarded patient investors over time.
If you’re closer to retirement, the conversation becomes more nuanced — but even then, moving entirely to cash may not be appropriate. Strategy should reflect the timeframe, not fear.
- Am I Reacting Emotionally or Strategically?
Market downturns trigger emotion. Headlines are dramatic. Social media amplifies anxiety.
But investment decisions made in heightened emotional states often undermine long-term outcomes.
Switching to cash after a fall is typically a reaction to past events — not a proactive strategy. A well-structured portfolio should already account for volatility.
The real question isn’t “Are markets falling?” It’s “Was my strategy appropriate before they fell?”
- What Happens If Markets Recover Quickly?
History shows that markets can rebound sharply and unexpectedly.
If you move to cash, when will you move back in? After the recovery has already happened? Many investors struggle with this second decision. Getting out is one decision. Getting back in is another — and often harder.
Timing both correctly is extraordinarily difficult, even for professionals.
- Does My Portfolio Match My Risk Profile?
Sometimes market falls reveal a deeper issue: the portfolio may not have matched your true comfort level in the first place.
If you are losing sleep, perhaps the issue isn’t the market — it’s alignment. A balanced, diversified portfolio designed around your risk tolerance may reduce anxiety without sacrificing long-term objectives.
But that assessment should happen in a calm environment — not during a crisis.
- Have I Sought Professional Advice?
Superannuation isn’t just an investment account. It’s a tax-effective retirement structure governed by rules, contribution caps, preservation ages and long-term planning considerations.
Switching to cash can have lasting consequences:
- Reduced long-term growth
- Lower retirement balances
- Missed compounding benefits
- Difficulty re-entering markets
- Emotional investment cycles
A qualified Financial Adviser can assess:
- Your age and retirement goals
- Your current asset allocation
- Your income needs
- Your risk tolerance
- Your broader financial strategy
Advice turns uncertainty into strategy.
The Bigger Picture
Volatility is not a flaw in markets — it is part of how they function. Superannuation was designed to harness long-term economic growth. Cash has its role, particularly for short-term needs and defensive allocations, but it is rarely the answer to long-term wealth building.
The real risk isn’t market movement. It’s making a reactive decision that permanently reduces your retirement outcome.
If you’re concerned about your super balance, that’s understandable. But before you act, pause.
Have a conversation. Review your strategy. Understand the trade-offs.
Because once you step out of the market, stepping back in requires timing twice — and that’s rarely a winning strategy.
If you’re unsure whether your super is positioned correctly for your stage of life, now is the time to seek advice. A structured review today can protect decades of retirement planning tomorrow.
If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.
This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.
(Feedsy Exclusive)
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Please consider whether the information is appropriate to your circumstance before acting on it and, where appropriate, seek professional advice.