Beware of ‘locking in losses’, SMSFs warned

“Chopping and changing your strategy is problematic because people will invariably sell out at a low and most likely won’t be comfortable to buy back in until the property market or sharemarket have risen,” he explained.

“I’m not a big fan of chopping and changing strategy in these times. Right now is a good example, the sharemarket had been increasing surprisingly well, but then last week it had big drop back again.”

Mr Hutton said that even those approaching or in retirement should still have some exposure to growth assets.

“I think it’s important to have that exposure, even if it’s uncomfortable at times — you’ve got to take a long-term view. When someone is approaching retirement, they might still have 25 years of investing ahead of them and so it’s still a long-term portfolio,” he said.

“I don’t subscribe to the view that once someone reaches retirement they should convert everything to secure assets because at that point you’ve still got a long-term investment horizon.”

For retirees receiving an account-based pension, Mr Hutton said they may want to consider reducing their pension payments if they’re able to. 

The government has reduced the minimum annual payment required for account-based pensions and annuities, allocated pensions and annuities, and market-linked pensions and annuities by 50 per cent in the 2019–20 and the 2020–21 financial years.

“If they want to give the portfolio a leg up to participate in any kind of rebound, then a good way to do that is to draw less out. Now that’s assuming they can afford to draw less out,” he said. 

“What we’re finding with this lockdown though is that people are actually spending less money. We certainly have found quite a few clients who’ve said they’re happy to reduce their monthly drawdowns for a while.”