Ask Paul: We're bracing for a downturn - how to protect our assets?
Q. I am a long-term subscriber. Love your work: it's very informative and provides timely information.
We know the golden rules of wealth creation are: don't spend more than you earn; invest in shares; salary sacrifice; make non-concessional contributions to superannuation; park your savings in a mortgage offset account, etc.
My husband and I are in our 40s.
My question is in terms of shares and superannuation: how do we best protect our assets to prepare for the market downturn? The majority of our super is invested in the balanced option. - Maggie
A. Thanks, Maggie. All of us here at Money appreciate your long-term support.
I also loved your quick snapshot of all my favourite money rules in one sentence. Fantastic!
We could have a bit of a debate about preparing for a market downturn. It has been a bumpy few months for shares, and property is clearly in a much-needed downturn.
Prices were getting ridiculous. But I am not sure this will be a major downturn.
The global economy is in pretty good shape, with low unemployment and interest rates. In Australia, employment and the economy are in good shape.
It is hard buying value when prices are high, so corrections like this are in my view all about holding onto what you have while continuing to invest.
An example is a company I really like, CSL. It was pretty expensive at $230 a share but in mid-October it fell back to around $175. I saw this as a good chance to buy a quality stock at a decent price.
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