How would your retirement savings handle another GFC?

The 2008 GFC took nearly everyone by surprise. Is it possible that it could happen again in the not too distant future?

Unfortunately, some reputable economic forecasters think that it could.

I’m certainly no financial expert and I’m not in the business of giving financial advice. However as I got burned by the 2008 stock market crash and have no desire to repeat the experience, I have been taking an interest in what some financial newsletter editors have been writing. Over the last 6 months the warnings of a worldwide recession have been getting louder.

As was the case in 2007/2008 the big problem is the American economy, which is drowning in debt while the stock market keeps climbing to what many experts are warning, is unsustainable heights. Added to that is Trump’s trade war and countries like Turkey and Argentina in serious financial trouble.  It doesn’t help that the Australian economy is nowhere near as healthy now as it was in 2008, when we had a large surplus. So it’s likely that if the world has another GFC in 2019/2020, we’ll feel the pain. Part of that pain will be a significant fall in the value of our super funds and any other shares we may hold.

I discovered another worrying issue when I started moving my meagre savings into cash and other “safer” investments and advising family members to do the same. The super funds we looked at were still operating on a “business as usual” basis and still offering “High  Growth”  investment options, which meant lots of exposure to Australian and International shares and property-  the sectors likely to suffer major losses if there’s a stock market crash.

Surely the highly paid financial managers running these big funds would be aware of the danger signs and taking steps to protect their members’ savings. Let’s all hope that they are!

Now don’t just take my word about the possible dangers. As I said earlier, I’m no expert. However it might be a good idea to have a look where your money is invested and seek some professional advice on how safe it would be in the event of a major fall in the stock market. It’s no good waiting till everyone else is trying to get out before you decide to act.

I hope that this warning is 100% wrong and the various experts writing on the dangers of a recession also don’t know what they’re talking about. But I’ve moved our investments – just in case.

Posted in Articles.