The Australian share market, along with the rest of the world, is having a bumpy ride at the moment due to the Coronavirus. Understandably, this volatility worries some people. In times of volatility, it’s important to take a deep breath and consider your long-term perspective.
There are many things that cause share market volatility. It can be a natural disaster, political event, economic data or, as right now, a global health event. Volatility, particularly when reported widely on news sites, understandably creates investor worry. But although we can’t rely on the past to accurately predict the future by selling out you crystallise the impact of point-in-time returns on your investments and miss out on the potential upside when markets recover.
Is the Coronavirus different?
Every external market event is different to the last one. All are common in that they cause short-term market fluctuations.
Precisely how this virus will impact markets long term is not fully known. In an economically interconnected world, there are justifiable concerns that company earnings in developed markets will be impacted for some time to come as the outbreak of the virus continues to expand. Share markets across the globe have declined in recent weeks, pricing in this concern.
This recent weakness in equities is not surprising. Since the virus first emerged in China, share markets had continued to rise. No risk of the virus disrupting the global economy had been priced. But this changed when the impact of the virus started to be felt around the world, with the Australian and US markets having now fallen significantly in the recent weeks.
So what should you do?
For most people, the answer is simply to sit tight, reduce spending where you can and keep an eye on what Government support is available. You can find this information along with the latest updates and advice from the Government at australia.gov.au.
Everyone’s situation is different and depending on your stage of life, retirement plans and other specific goals, it may be worth getting some personal advice. If market volatility is causing you stress, try to avoid monitoring fluctuations too regularly. However, if you’re losing sleep over what it means for you and your investments personally, you may like to talk with a financial advisor.
I’m in financial stress due to COVID-19, is there help?
Yes, there is help available through Federal Government financial assistance and also from your superannuation fund. A summary is provided below:
1. Support for individuals and households
The JobKeeper payment is available to employees of a business that has been significantly impacted by Coronavirus. Employers may apply on behalf of a full time, part time of casual employee to receive a fortnightly payment of $1,500 if they meet the eligibility requirements.
Income support for individuals will be temporarily expanded over the next six months. The Government is establishing a new Coronavirus supplement of $550 per fortnight on top of existing income support payments that will be paid to both existing and new recipients of Jobseeker Payment, Youth Allowance, Parenting Payment, Austudy, ABSTUDY Living Allowance, Farm Household Allowance and Special Benefit.
There will also be payments to support households. Two separate $750 payments will be made to social security, veteran and other income support recipients and eligible concession card holders. Individuals receiving the Coronavirus Supplement will be ineligible for the second $640 payment.
To find out more about the support available to individuals and households, visit treasury.gov.au/coronavirus/households.
2. Early access to superannuation
The government has announced that individuals affected by the Coronavirus can apply to access up to $10,000 of their superannuation in 2019-20 and up to a further $10,000 in 2020-21 (conditions apply) from mid-April 2020.
This new early release measure is specifically to help households that are financially affected by the Coronavirus situation, which is reflected in the eligibility criteria. It doesn’t change the existing ways to apply for early access to your super.
The government has specified that to apply for early release you must satisfy any one or more of the following requirements:
- you are unemployed; or
- you are eligible to receive a job seeker payment, youth allowance for jobseekers, parenting payment (which includes the single and partnered payments), special benefit or farm household allowance; or
On or after 1 January 2020:
- you were made redundant; or
- your working hours were reduced by 20 per cent or more; or
- if you are a sole trader — your business was suspended or there was a reduction in your turnover of 20 per cent or more.
If you are eligible, you are able to apply directly to the ATO through the myGov website from 20 April. After the ATO processes your application, they will issue you with a determination confirming your eligibility. The ATO will also provide a copy of this determination to your superannuation fund.
According to the government, people accessing their superannuation under this new coronavirus-related early release measure will not need to pay tax on amounts released and the money they withdraw will not affect Centrelink or Veterans’ Affairs payments.It is important to note that while there is Government financial assistance available if you have been affected financially by Coronavirus, early access to your superannuation is accessing your money. Any withdrawals on your superannuation will reduce your account balance. Make sure you look after yourself now but keep your future self in mind too. It’s also a good idea to check online that your superannuation account details are correct, should you need to make a withdrawal.
For more information, you can download the Early access to superannuation factsheet from treasury.gov.au
3. Support for businesses
The JobKeeper payment is available for businesses whose turnover has decreased by more than 30 per cent (if they have a turnover of less than $1 billion). After the businesses registers their eligibility for the payment, the Government will provide $1,500 per fortnight per eligible employee for a maximum of six months.
Businesses affected by Coronavirus may also access the below initiatives:
- Boosting cash flow for employers
- Temporary relief for financially distresses businesses
- Increasing the instant asset write-off
- Backing business investment
- Supporting apprentices and trainees
To find out more about the support available for businesses visit treasury.gov.au/coronavirus/businesses.
Nothing in this article is intended to be financial, legal or investment advice and should not be construed or relied on as such. Before making any commitment of a financial nature you should seek advice from a qualified and registered financial or investment adviser. This information relied on sources believed to be reliable and accurate at the time of publication.