Over 40 with a low super balance? Stop chasing returns

If you're over 40 and feel like you're behind on superannuation, your first instinct might be to think you need to make more money from the market.

Find better stocks, take more risk and chase higher returns, but that might be looking at the problem from the wrong angle.

If retirement is potentially less than 20 years away, one of your biggest risks isn't failing to find the next big winners.

It's suffering a major loss and spending years trying to recover. The maths explains why.

Imagine you have $100 invested and the market falls 50%; you're left with $50.

If the market then rises 50%, you're only back to $75. To turn that $50 back into $100, you need a 100% return.

That's why avoiding even part of a major downturn can make such a difference.

Take two hypothetical investors, John and Sally, who both invest $10,000 in the Australian share market 10 years before the Global Financial Crisis in 2007.

Using the S&P/ASX 200 price index from November 1997 to November 2017, John remains fully invested, and his $10,000 grew to around $24,600.

Sally invests in the same market but approaches risk differently. Rather than trying to predict the top, she watches the market's long-term trend.

Think of it as drawing a line underneath the major lows as the market rises.

If price breaks clearly below that line and continues falling, it's a warning that the trend has changed, so she moves to cash.

She doesn't try to pick the exact bottom. She waits until the market stops falling, starts turning, and a new upward trend begins to form before getting back in.

Using the GFC as an ideal example, exiting around the 2007 market peak and re-entering around the 2009 low would have turned Sally's $10,000 into approximately $53,500 by November 2017.

Same starting capital, same market, but she more than doubled John's return.

The point isn't that Sally picked the top and bottom perfectly, she didn't need to.

It's that you don't need to be a market genius to see that prices had stopped rising and started falling. And in 2009 it became evident that prices had stopped falling and started recovering, that's the real lesson.

As you approach retirement, time becomes just as important as return.

At 25, you potentially have decades to recover from a major market collapse. At 45, 50 or 55, losing years rebuilding your portfolio can dramatically change your retirement.

So rather than only asking, "How can I make more money?", perhaps there's another question that's just as important: "How do I avoid losing what I have already accumulated?"

If you're over 40 and trying to make the next 20 years count, protecting your capital during major downturns is far more valuable than finding the next hot stock.

Best and worst sectors

Consumer Staples was the best-performing sector this week, rising more than 1.5% driven by better-than-expected results from supermarket giants Coles and Woolworths.

Both delivered strong profit growth and improving margins, while renewed interest rate concerns also encouraged investors back towards more defensive areas of the market.

Materials gained 1.5% as stronger commodity prices across iron ore, copper, gold and lithium drove broad buying across the major miners.

Healthcare rose more than 1%, helped by a strong result from Ramsay Health Care, which delivered 23% underlying profit growth, which saw its shares surge around 15%.

At the other end of the market, Information Technology was the weakest sector, falling 2.71% as WiseTech fell around 10% after its FY26 result.

In addition, hotter inflation increased rate hike expectations and put further pressure on highly valued growth stocks.

Communication Services was the second-worst sector, dropping 2.47% as heavy selling in Telstra and REA Group outweighed strength elsewhere.

Telstra is still under pressure following its FY26 result, and REA fell sharply on Thursday.

Consumer Discretionary rounded out the worst performers this week, falling more than 2% as hotter inflation lifted expectations for another RBA rate rise. This weighed on retailers, while Wesfarmers also fell after its earnings result.

Best and worst stocks

Ansell Limited led the ASX Top 100 this week, climbing more than 15% after a strong FY26 result, with adjusted EPS up 17.8%.

Margins also expanded, and management is forecasting further earnings growth in FY27.

Paladin Energy followed, rising more than 14% after strong FY26 results showed revenue up 71%.

Production was at the top end of guidance and costs at the low end, while the business moved into positive operating cash flow.

Ramsay Health Care rounded out the leading performers, gaining more than 11% after a strong FY26 result.

Underlying profit rose 22.9%, margins improved, and management forecast further earnings and margin growth in FY27.

At the other end, Liontown Resources was the weakest performer, falling more than 9% as investors focused on higher costs and heavy spending at Kathleen Valley.

The FY27 cost guidance was disappointing despite strong cash generation.

Endeavour Group followed, falling more than 9% after a weak FY26 result, with underlying profit down 14.8%. Retail earnings were down 17.6% and the full-year dividend cut 36%.

Sigma Healthcare Limited also fell more than 9% despite a strong FY26 result. Investors focused on cash conversion, integration costs and whether future growth can justify its high valuation.

All Ordinaries Index update

As we close out August, the All Ordinaries Index is down 0.29% so far this week.

It started strongly, with buyers pushing the market towards 9400, but Thursday's selling saw the index retreat towards last week's low and the all-important 9200 level.

That makes 9200 the key level to watch. If it holds again, sellers will have had two attempts to push the market below this level and failed.

That would strengthen the medium-term bullish picture and suggest buyers are still willing to step in on market pullbacks.

Interestingly, August is normally an average month seasonally, yet this year it has been one of the stronger months, alongside April, July and November.

This suggests reporting season has ultimately delivered more positives than negatives for the broader market.

The next test is September, which historically ranks as the second-worst month of the year. As such, we could see volatility pick up and some of the stocks that have run hard begin to pull back.

That could also create opportunities elsewhere. Stocks that were heavily sold during reporting season may start to recover as money rotates out of the recent winners and into areas offering better value.

For now, the broader picture still looks increasingly bullish, particularly among larger-cap stocks.

The next area I'm watching closely is the mid and small-cap space. If the broader market keeps pushing higher, these stocks could be the next part of the market to catch up.

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