You wake up and check your phone. The markets have opened, and your super is down 25%.
$125,000 gone. Just like that.
What do you do?
I get asked this question constantly, dressed up in different apocalypse scenarios. The US defaults on its debts. A global recession hits. China invades Taiwan. The AI bubble bursts.
Truthfully?
Every investor has their own disaster movie playing in their head.
The problem is you’ve created a story … and it’s almost certainly wrong.
I know this because every story I’ve created has been wrong too:
I was convinced Trump’s 18% tariffs would skewer the world’s largest economy.
Didn’t happen.
I thought AI was overhyped by Silicon Valley grifters and would crash.
Hasn’t happened (yet).
So, faced with all this doubt and fear, how do I continue staying in stocks?
Well, my secret to investing is the same as my marriage:
Low expectations and permanent paranoia.
I expect the share market to deliver around 7% after inflation over the long term. Nothing more.
I stay away from whatever Wall Street is selling (like private credit) and stick to index funds.
Finally, I keep years of living expenses in cash and fixed interest (yes, it reduces my returns, but it lets me sleep at night).
Now back to your nightmare where your super has evaporated.
What do you think you would do faced with that news?
Your answer to this question tells you everything about whether your portfolio is right for you, or a disaster waiting to happen.
Does it make you want to panic and sell?
If so, panic early. Talk to your super fund about reducing your exposure to the markets.
Does it make you want to buy more shares on the cheap?
Then you likely need more cash sitting ready to pounce when it happens.
Look, the crash will come. It always does. The key to sleeping soundly is to open your eyes and live through it today.
Tread Your Own Path!