September 2002 Volume 83 Number 9 "serving the protectors"

Recent volatility in global markets means the value of your superannuation and investment nest eggs has probably started to slip. Shayne Callaghan from PCU Investment Services offers some advice on what you need to do.

Share markets around the world have been going one step forward and two steps backwards for most of the past 12 months. Some experts predict that the next few months will be even worse. So what should you do about it?

According to the Police Credit Union’s specialist financial advisers, PCU Investment Services, an investment is a long-term game – you should hang in there and maintain your discipline and focus. Shayne Callaghan, a financial planner with PCU Investment Services, says that, if your financial plan has been drawn up with the help of PCU Investment Services, it will have been based on the assumption that sooner or later such a market downturn was inevitable.

“Basically, what we are saying to clients now is that we always contemplated that this (volatility) could occur,” he says. “Now it has occurred, so why change now?

“Having said that, of course people are allowed to change (their investments) if they so wish.”

Shayne says clients are always shown a matrix of the performance of various markets over time, but PCU Investment Services never claims to be able to judge the timing of the market.

One thing we have no idea about is the timing (and) duration of downturns, or when they will occur,” he says. “We go back over 20 years in expectations, but the matrix is basically rolling returns over the past 100 years.”

Shayne says the matrix shows that anyone investing in the share market needs to have a seven-year perspective of his or her investments. “If you are in fixed interest, (your investment timeframe) has got to be greater than 12 months, probably more like three years, and any money that you need to access within that period should be in cash.”

Before making an investment, Shayne says you should work out how much cash you are realistically going to need over the next three years. This amount needs to be placed into cash investments that you can readily access.

“What (investors) might need in cash in the next three to seven years can’t be invested in the share market.” The majority of PCU Investment Services’ clients have invested on this basis. Only about 10 to 15 per cent of clients invest directly in shares, with the majority investing in managed funds. Investing in a managed fund means your money is spread across a range of investments including shares, property, fixed interest, and cash.

PCU Investment Services takes a more conservative, defensive investment approach than most advisers, but Shayne says that the markets have now dragged so low that even the most defensive portfolios are starting to be affected.

“We are very hands-on in looking after clients,” he says. “We get them in, hold their hands a little bit and explain things. It is important that they continue to invest in long-term, quality growth investments to secure their futures.”

Need help with your investments?

Then look no further than PCU Investment Services. Its professional financial planners provide a personal and independent service, and can advise you on issues such as superannuation, retirement planning, risk protection insurance, education funding, pensions, social security, redundancies and rollovers.

As a PCU member, you’re entitled to a free initial consultation with PCU Investment Services. After your first meeting, a qualified adviser will present you with a written report outlining a financial plan tailored to your needs.

So why not take advantage of your free appointment with PCU Investment Services? Call them today on (08) 8231 5533 to arrange a convenient time.

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