Proving that when you’re up, the only way is down, a year that started surprisingly promising turned out to be a disappointment for fund members.

The good news is that funds were able to minimise the damage in December, with the average fund losing 0.11% in value.

The bad news is that funds lost around 3.5% from July 1 to December 31 - and that loss more than wiped out the gains in the front half of the year.

“The global economic outlook for 2012 isn't pretty. A eurozone recession is certain, the UK is double-dipping and the US is growing at a snail's pace – fasten your seatbelts, it's going to be a bumpy year” The Guardian

Is November the new October? We ask because, whilst October is traditionally a bad month on financial markets, this year October saw healthy growth.

Any celebrations have been short-lived, however. The average fund lost 1% in value in November.

We shouldn’t be surprised.

It was an unpredictable year that has resolutely refused to behave itself.

Funds recover in October

October is traditionally a bad month on financial markets. If things have previously been gloomy, they generally get a whole lot gloomier in October. If everything’s been cruising along nicely, it usually goes inexplicably pear-shaped in October. And yet, here we are in an extended period of economic nervousness and - defying all odds - funds have posted a very healthy result. We wish we could explain it. We can’t.

With 2011 hurtling to a conclusion, we’ve done what we like to do towards the end of each year. No, not party. We like to look back at what’s happened in the past 12 months, and we have to say that what we see is not all that special. In fact the super landscape isn’t a pretty sight right now.

Come to think of it, these past five years have been fairly bleak. Five year performance is the worst it has been since compulsory contributions started 19 years ago. The average Balanced fund hasn’t even managed to return 1% p.a. over the past 5 years.

Super uncertainty demands action. Or does it?

It’s an awfully baffling time for fund members.

After years of stable growth, the GFC threw everything into, well, if not chaos, then at least a bit of a mess. Returns plummeted. Some members reported losing 30% of their super’s value in a single year. Retirement plans were put on hold. People who’d previously taken no interest in their super suddenly sat up and paid attention.

Not the start we wanted. Funds shed 1.4% in July
The new financial year hasn’t got off to a spectacular start and the performance of funds over the past few months must leave many of you wondering when (or maybe if) your super savings will ever fully recover from the GFC.

Uncertainty ushers in period of caution
There’s a new conservatism sweeping the world. In the US, against the odds, the Tea Party is being taken seriously. In Australia, Labor government after Labor government is making way for coalition governments. Australians are saving more than they have for a long time. The price of gold is skyrocketing as people become nervous about share markets.

Sixty years ago it was said that Australia was riding on the sheep’s back. Rural life - and especially the wool industry - was the foundation of the Australian economy.

Last month we hinted that the average fund could deliver 10%+ growth for the 2010/11 financial year. We indicated that much depended on the share market performance to June 30. Well, guess what?

Have you seen the video on You Tube that explains the global financial crisis? It was a very neat and simple explanation of what went wrong.

Well, the producers of that video should get ready to make another video to ex-plain the Greek financial crisis, because there is a good chance that what’s happening in Europe right now could also have a damaging flow-on effect, hurting average Australians. Here’s how.

How much more could your super fund do for you?
Super funds tell us they exist to benefit their members. The best way they can do that is by delivering the best possible returns. But the other day we started wondering what else funds could do to help their members.

April returns make 10% possible for 2010/11
Okay, so April returns weren’t anything to celebrate, but the average fund did manage to post a modest gain of 0.15%. The good news is that this has kept alive the possibility that the average fund could deliver double digit growth for the 2010/11 financial year. We won’t get too excited just yet. You might recall that we looked like we would get 14% or so last year, but a string of poor months dragged the 2009/10 result back below 10%.

Whilst the majority of Australians still don’t support the government’s Carbon Tax, there’s no doubt that most of us are more environmentally aware than ever. More people are choosing to eat organic food. People are aware of food miles and carbon neutrality. Ordinary Australians recycle. Many of us are going solar, installing low-energy light globes and appliances.

Well, what do you know? March has turned out OK for super funds, which is quite a surprise given how gloomy things were looking halfway through the month.
Around the ides of March it looked likely that super funds would post substantial losses. By the end of March, however, the average Balanced fund products had posted a 0.34% gain for the month and a far-from-shabby 2.45% gain for the quarter. This makes it 3 consecutive positive quarters, with gains for the financial year to date nudging 10%. Not bad, given the turbulence early in the month.

As you know, Savvy publishes a constantly refreshed list of the Top Ten funds in all popular option types. You could call these the Top Dogs of super. These are the funds that have shown the best ability to grow your super balance.

Feb results up 1% but dark clouds gather
Super funds had another healthy month in February, putting on a little over 1%.

However, the impact of recent events in Japan and the middle east look set to knock the wind out of returns for Australian super funds in the near future.

Funds continue to bounce back. Up 1% in January.
Remember the GFC? We don’t. Well, we do really. But we prefer not to. With every month, that becomes easier and easier. Most super funds have now recovered to within 5% of their pre-GFC highs.
A couple of poor months blemished the overall result for the 2009/10 financial year. Nevertheless, funds put on a healthy 9.8% for that year. Better still, by adding 0.99% in January, they have now grown 8% since the start of the current financial year.

Time to take responsibility for your relationships
OK, this story is not about your personal relationships. It is about your relationship with money. Specifically, it is about your relationship with super. We know, we know, we know. You’re Gen Y. Super is NOT high priority. Saving for a rainy day is something you might do - on a rainy day. Retirement is something old people do. Way more important right now are things like sorting your social life and looking for a new job that pays you more and works you less.

Premiums down. Auto acceptance up. Too good to be true?
Insurance premiums have fallen 4% in the past year and a massive 45% over the last four years for some age groups. If you are employed, in some instances you can now get up to $1.5M of Death and TPD cover without a medical assessment. Rising auto acceptance levels also mean that you might be able to obtain Income Protection insurance covering 99% of your salary with relatively short waiting periods.

What hope of reaching the magic million by retirement?
Superannuation experts reckon that each of us needs $1million in super savings to ensure a comfortable retirement. It seems like a lot of money. It is. But if you are going to maintain a comfortable lifestyle in retirement, that is what you will need.

Super funds put on 1.7% in December
Whilst funds added 4.6% to their member balances in the full calendar year, they have put on 7.0% in the past six months. If maintained between now and June 30, the 2010/11 financial year will be the best since before the GFC started. It is understandable that fund managers are a bit nervous about how the next six months will unfold. They well remember the last financial year where growth of 11.9% from July to December was followed by a loss of 2.3% from January to June.

We have noticed one recurring concern from fund members over the past few years (other than the obvious one about where their money has gone). Many who lost money have been baffled that they could lose so much money when their super had been invested in a product called Moderate Defensive, for example. How could something with a name that suggests security lose 30% in a year?

Super funds were on their way to posting healthy 13% plus results for 2009/10. Then the jitters returned. The financial year has closed with a run of negative returns that will rob most fund members of thousands in lost income. Why have funds gone backwards again? Where’s your money gone? Who’s responsible? And what’s the outlook for the coming year?

To avoid a repeat of your GFC losses, you need to do a simple exercise. As much as it might hurt, have a look at last yearʼs statement. Notice anything missing (apart from money)? Thereʼs one glaring omission from all the statements weʼve seen. This omission is critical if youʼre going to survive the next economic downturn. So what is it?

What do a cat, the moon and quantum physics have in common? Tick, tick, tick, tick. Time’s up. The answer is nothing.
Another question: What do a hundred Balanced options have in common? Tick, tick, tick, tick. Time’s up. The answer is nothing.
What's wrong with Balanced options?

The Australian superannuation system is considered a pretty good model. It isn’t perfect - and many would argue that constant tinkering has weakened rather than strengthened it. That aside, it is likely to be copied in several other countries. However, employment changes have put thousands of Australians at risk.

For the seventh month in a row, the Australian share market has continued to help super funds charge back into the black. We have now seen the highest five singular month returns for Australian Share options in the last five years. Who’d have guessed it at the start of the year?

The good news for embattled fund members is that the July results just released by SuperRatings show quite healthy returns.

Balanced options are the default investment types offered by most super funds. They are the option type held by the vast majority of Australians - by a long shot. There’s something about the word Balanced that inspires confidence. After all, balance is good. We try to eat balanced diets. We learn to balance work and play. A Balanced option implies a medium risk, medium return investment that many of us find to our liking.