Investors warned of another bad year

Intech Financial Services said that investors should be prepared for another year of negative returns in 2002-2003, stating that the odds of this occurring are one in four, compared with one in six in previous forecasts.

Rival group Assirt is updating its forecasts, after predicting last week a worst-case scenario of a 5 per cent fall, or $26 billion, or a best-case scenario of a 2.7 per cent decrease, or $13.5 billion.

Intech has calculated returns from 50 per cent of Australia's investment managers and estimated that the value of superannuation savings fell by 4.5 per cent over 2000-2001, or more than $20 billion, the worst year on record.

The returns are disappointing for people who have recently retired or will do so next year, as their savings will be worth considerably less than 12 months ago. Both the Council on the Ageing and the Australian Retired Persons' Association have responded to the situation by urging people over 50 not to panic, saying they should seek additional financial advice and think about their investment returns over the entire investment period rather than just one year.

Kevin Bailey, MD of financial planning firm The Money Managers, said yesterday that if anyone considered delaying retirement due to one year of negative returns she or he is a “victim of bad planning”.