Markets rattled again but superannuants should hold their nerve

By Colin Lewis, Head of Strategic Advice, Fitzpatricks Advice Partners
March 2026

Global equity markets have entered another period of turbulence, rattled by escalating tensions stemming from the US–Israel conflict involving Iran and rocketing oil prices.

We’ve been here before – this downturn marks the latest in a series of shocks testing investor resilience over several decades.

Just 12 months ago, shockwaves went through equity markets brought about by the introduction of sweeping tariffs by the Trump administration.

Before that, major market downturns were primarily driven by the 2022 inflationary bear market (where both stocks and bonds experienced significant declines simultaneously), the 2020 COVID-19 pandemic and the 2008 Global Financial Crisis.

Market volatility, uncomfortable as it is, remains an unavoidable feature of long-term investing.

Superannuation is a structure — not an investment

With markets down again, most Australians have seen their superannuation balances fall unless they’re invested conservatively – primarily in cash, term deposits and fixed interest securities – but it’s important to recognise that super funds are a tax structure. So, super’s not the problem.

How your wealth fares is driven by what you’re invested in (shares, property, cash etc.) regardless of whether you’re investing inside or outside super.

Whilst easier said than done, now’s not the time to throw logic out the window when it comes to investing in super; contributing regularly remains compelling even when markets are moving against you.

Superannuation is, by design, a long-term vehicle, so unless you’re about to retire, you’re likely to have years — or decades — for markets to recover. Periods of weakness are often when disciplined investors benefit the most, because contributions buy assets cheaper, and in managed funds, more units when prices are lower.

Stopping contributions when markets fall may feel sensible, but it can undermine long-term outcomes and cause you to miss the upside when markets eventually rebound.

The power of pre‑tax concessional contributions

Concessional contributions include an employer’s compulsory 12 per cent superannuation guarantee (SG) contributions, voluntary salary sacrifice contributions and personal deductible contributions.

These contributions are taxed at 15 per cent tax (30 per cent for high income earners) which is often far lower than an individual’s marginal tax rate.

This tax saving is the real motivation for many contributors – beyond building retirement savings.

Don’t make voluntary contributions if your income is less than the effective tax-free threshold of $22,575, or if you’re eligible for the seniors and pensioners tax offset, $35,813 (single) or $31,888 (each member of a couple), otherwise it’s costing you to contribute to super.

If you earn more but less than $45,000, there’s hardly any benefit with the current 16 per cent tax rate – unless you earn under $37,000 where you get the 15 per cent contributions tax refunded (up to $500) with the low income superannuation tax offset (LISTO).

From 1 July 2027, the LISTO income threshold increases to $45,000 and the maximum payment rises to $810.

Without LISTO, super would be a tax penalty rather than concession for low-income earners.

For everyone else, the tax savings provide a meaningful buffer against market downturns.

It insulates you from losing money when markets fall, and they must fall a lot before you’re worse off from having contributed in the first place.

How the tax buffer works

Take Mike, Carol and Marcia who are on tax rates of 32, 39 and 47 per cent (including Medicare levy), respectively.

By making pre-tax contributions, they put 85 cents of each dollar they earn to work in super. But if they each paid tax and invested personally, then only 68, 61 and 53 cents respectively would be working for them.

This tax benefit makes it hard for them to lose money.

The tax saving from contributing to super means Mike’s investment must drop 20 per cent before he’s worse-off from having contributed.

In Carol’s case, her super investment must fall 28 per cent before she’s worse off and for Marcia it’s 38 per cent.

It’s highly unlikely they’ll be invested entirely in equities. Most Australians are in a balanced fund – 60 to 70 per cent in shares and property – or growth fund – around 85 per cent in shares and property.

So, the fall in equity markets needs to be even greater for Mike, Carol and Marcia to be worse off – assuming other asset classes haven’t fallen simultaneously.

Assuming they all have a 70 per cent exposure to equities in super, the market must drop 28 per cent for Mike, 40 per cent for Carol and 54 per cent for Marcia, to be worse off – and as bad as it’s been lately, that hasn’t happened.

If they’re wage earners, this applies equally to their employer’s SG contributions – markets must drop by these percentages before they’ll lose money on these contributions.

Then there’s Greg on a tax rate of 47 per cent (including Medicare levy) but his combined income and concessional contributions exceed $250,000, so he pays an extra 15 per cent tax on contributions over this threshold – division 293 tax.

So, while Greg is on the top tax rate like Marcia, his investment from a personal deductible contribution must fall 24 per cent before he’s worse off.

If Greg’s a wage earner, the $30,000 contributions cap will be eaten up by his employer’s SG contributions leaving him no scope to top up – unless he has unused cap amounts from previous years and had a super balance less than $500,000 at 30 June 2025.

Markets must drop 35 per cent before Greg loses money on his employer’s contributions (with 70 per cent in equities).

Dollar cost averaging — the quiet workhorse

Regular deposits into an investment at regular intervals over a period – dollar cost averaging (DCA) – is a powerful way to invest as it smooths volatility and avoids the trap of trying to pick the perfect moment to invest.

Wage earners automatically benefit from DCA with employer SG and many salary sacrifice contributions made regularly.

With voluntary contributions, discipline is even more important. The worst time to stop is when markets are weak because that’s when DCA works best.

Stay the course

In volatile conditions, the combination of super’s tax advantages and the steadying effect of DCA makes a powerful case for staying invested and maintaining regular contributions.

Markets will recover – and those who hold their nerve are the ones most likely to benefit when they do.