The end of the financial year is fast approaching.  For the second year in a row, a diversified ‘balanced’ superannuation portfolio will probably record a negative year.  This is the first time since accurate records were established in 1980 that this has happened.

Should we panic? Is this just the beginning of a continuous stream of negative returns?  Have we entered a new world order where investments will continue to decline in value?  Should the Spice Girls get back together?

The answer in all cases is an emphatic no!

Even though the Global Financial Crisis (GFC) seems so horrendous at the moment, it will not last forever.  Just think of the GFC as the mother of all financial hangovers.  All parties have to come to an end and hangovers have to be endured before the inevitable recovery can occur ready for the next big celebration.  

The world went on a credit fuelled spending party for five years and the GFC has ensured we all pay the price in the form of the first synchronised global recession since World War II.  

Unemployment is rising, investment values have fallen, credit is harder to come by.

But it is not the end of the world.  There are some positive signs that we are starting to see the light at the end of the tunnel.

American house prices have stabilised after dropping 25 – 50% over 18 months.  The banking crisis seems to have abated with some positive results from overseas financial institutions.  Government stimulus packages world wide have helped replace the fall in private spending to aid economic activity.  Interest rates are at historic low levels which will ease private and business costs.  Share markets have rebounded 20 to 30% since the low levels in March.

Sure, investment markets are still in for a bumpy ride over the next few months or so and the broader economy is likely to remain close to recession for the rest of 2009.  But remember, superannuation is a long term investment, and over the long term, there will be more parties to attend and hangovers to endure, some bigger than others.  That’s life.  Make the most of the good times and don’t just focus on the bad.

As for superannuation returns for the next financial year, are you prepared to bet that it will complete a hat-trick of negative returns?  Or is there really light at the end of the tunnel?

This information is provided by Peter Mildren, a Certified Financial Planner TM, an Authorised Representative of RetireInvest Pty Limited ABN 23 001 774 125, AFSL 238429. This information should be used as a general guide only.  Professional advice should be sought before making investment decisions.  Phone 8363 7888.

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