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Ask Paul: We're bracing for a downturn - how to protect our assets?

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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.

ask paul clitheroe protect assets shares super downturn pay off mortgage by 40

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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Paul Clitheroe AM is the founder of Money and serves as the publication's editorial adviser. One of Australia's most trusted personal finance experts, Paul has spent decades helping Australians build wealth, manage debt and make smarter money decisions. He is widely known for host­ing the Money TV program and authoring best-selling personal finance books. Since launching Money in 1999, he has played a leading role in delivering practical, independent financial guidance to Australians. Paul is chair of InvestSMART Financial Services. He was the founding chair of Ecstra Foundation, a national not-for-profit focused on improving financial wellbeing, from 2018 to 2026, and led the Australian Government's Financial Literacy Board and Financial Literacy Australia from 2004 to 2019. In academia, Paul is chair in financial literacy at Macquarie University, where he is also a Professor in the School of Business and Economics. Ask Paul your money question. Due to volume, Paul cannot respond to questions posted in the comments section.
Comments
Liz SHELDON
February 14, 2019 9.54pm

We have learnt so much from purchasing money magazine. We have followed a budget for many years first agreeing to live on one wage as much as we could always living below our income. In July of each year we sat down to discuss diversifying our savings. Our recordings of expenses were also reviewed for wiser spending over the next twelve months if needed. We now have no debt. I retired at 62 and my husband who loves his work has 3 months holiday a year and 18 hours working a week. We are now self funded retirees . Sadly our two children haven't followed our guidance and in their late 30s. We learnt rescuing had an adverse effect where we could have become their bank account then we would never have experienced this financial freedom.
Thank you to you and your team for all your financial advise through your magazine.