Shifting your super to cash – is there a downturn coming?
Written by Glen James
Host of the Retire Right & money money money (formerly my millennial money) podcasts & author of The Quick-Start Guide to Investing.
A member of our community shared this recently:
‘I’ve moved 100% of my super to cash. Blind Freddy can see a meltdown coming! Gold’s at a record high, the stock market’s overbought, the US is basically bankrupt — I’ll sit in cash and reassess later.’
Plenty of Australians feel like this right now: worried about world markets, suspicious of “experts,” and wanting to take control by pulling back to what feels safe. But while it feels like a safe move, switching entirely to cash can quietly cost you more over the long run than the short-term volatility you’re trying to avoid.
Quick note: in super, ‘cash’ usually means your money is in short-term deposits or cash-style investments earning interest, not literally sitting in your bank account.
1. Cash feels safe, but it doesn’t grow
When you move everything to cash, you protect yourself from short-term ups and downs, but you also shut yourself out of long-term growth. Over 20 or 30 years, inflation eats away at your buying power. So even if your balance looks steady, what it can buy slowly shrinks. If you’re retired or close to it, you still need part of your super working for you, earning more than inflation so your savings last the distance.
2. Fear isn’t a financial plan
Vince said it best: ‘If you feel the need to move to cash, you were probably in the wrong portfolio to begin with.’ Markets always have corrections. What did we see earlier in the year as Trump began to announce his tariffs? Exactly the same volatility in markets. That’s part of investing. If your portfolio matches your comfort with risk and your time horizon, you shouldn’t need to react to every headline or prediction of doom. Don’t become one of those investors who loses money trying to avoid the drop, when it was best left invested as it was.
3. Stay engaged, not scared
Now’s a good time to check in on how your super is invested. Most funds offer free guidance on whether your mix of cash, bonds, and shares suits your stage of life. Even a short chat can give you clarity, and stop you making decisions out of fear. And if you’re still working, remember: every contribution going in now buys more units when markets are lower. That’s how long-term investors quietly win over time.
In summary:
Markets rise, fall, and rise again. Always have, and always will. The goal isn’t to outsmart the market, it’s to outlast it. So before you move everything to cash, take a breath, check your strategy, and make sure you’re investing for the years ahead, not just the next headline.
Community question
Community member says: Has anyone gifted equity to their children to buy them an investment property? Wondering about the pros and cons of this? Any advice would be welcome, please.
Glen says: A lot of people want to help their adult kids get into the market, especially when property prices are wild. But gifting equity (or any big financial help) comes with a few layers to think through, financial, emotional, and even Centrelink-related if you’re nearing retirement.
First up, I’d say tread carefully. Helping your kids buy property can be amazing, but make sure they actually want the property and understand the commitment. Sometimes parents are the ones driving the idea, and the kids end up with a loan, a tenant, and a tax headache they didn’t ask for. A family chat about goals, lifestyle, and what “help” looks like goes a long way here.
Then there’s how you structure the help. Straight-out gifting equity or cash can trigger Centrelink gifting rules (if you’re near age pension age), and you lose control of the money once it’s given. A safer middle ground is a parental guarantee, where you use your property’s equity as security, but the kids are still responsible for the loan. That way, they stand on their own feet, and you’re not handing over ownership or large sums.
Lastly, don’t underestimate the family dynamics. Money and property can get messy fast, especially if relationships change or divorce enters the mix. Set boundaries early, make sure everyone’s on the same page, and maybe get a lawyer to document the arrangement properly. The short version? Helping is fine, just make sure it helps them and doesn’t hurt you. Watch this clip with me and Vince discussing this topic if you’re interested.
