Market Volatility: Why Panic Selling Is the Wrong Move
- WT Capital
- May 20
- 3 min read
With headlines about super tax changes, property market shifts and economic uncertainty, it’s no surprise that some SMSF investors are feeling the pressure.
But amid the noise, it’s critical to separate emotion from strategy. According to financial advisers and industry experts, panic selling Self Managed Super Fund assets in response to market or legislative change is not only unnecessary — it can do more harm than good.
Here’s why staying the course is often the smartest move, and how SMSF trustees can make more informed decisions, especially when holding property.
What’s Triggering Investor Anxiety?
Recent events have led some SMSF members to question whether their asset mix is still viable:
The new 15% tax on balances over $3 million, which includes unrealised gains
Ongoing interest rate volatility, affecting both property values and income streams
Media speculation about future super reform or contribution caps
Broader market fluctuations creating valuation swings
For trustees with substantial exposure to property, shares, or unlisted assets, the pressure to “do something” can feel intense. But reacting emotionally — especially with long-term retirement assets — can create irreversible losses.
Why Selling SMSF Assets Under Pressure Is Risky
Here are just a few reasons why reactionary selling can backfire:
1. You Lock in Losses
Markets and valuations move in cycles. Selling after a downturn crystallises losses that might have recovered — particularly with property or quality shares.
2. You Trigger Tax Consequences
Asset sales within an SMSF can lead to capital gains tax or disqualify assets from more favourable pension-phase treatment down the line.
3. You Disrupt Long-Term Strategy
Many SMSFs are built for 10–30 year timeframes. Selling based on short-term fear misaligns your strategy with your retirement goals.
“SMSFs have a very long investment horizon and they are not subject to the same drawdown pressures as large super funds.”
Why Property in an SMSF Is (Still) a Long-Term Play
At WT Capital, we work with many trustees who have leveraged their fund to acquire residential property through an SMSF. When questions arise — like “Should I sell before rules change?” or “What if valuations drop?” — our answer is grounded in one thing: strategy over sentiment.
Here's what we remind clients:
Tax changes don’t eliminate value — They shift how it’s calculated or distributed
Valuation declines aren’t realised unless you sell — And most SMSF loans aren’t called in unless you breach the loan
SMSFs holding residential property still benefit from:
Ongoing rental income (taxed at 15% or 0%)
Long-term capital growth
Potential to transition to pension phase with 0% tax on earnings
In short: SMSF property investing remains a resilient and high-control asset class, particularly for Australians seeking long-term financial independence.
5 Steps Trustees Can Take Instead of Selling
Rather than rushing to liquidate, here’s what you should be doing in the face of uncertainty:
Action | Why It Matters |
Review your fund’s investment strategy | Ensure it reflects current risk appetite, liquidity needs, and compliance |
Revalue property assets annually | Avoid surprises under new tax rules and meet audit standards |
Stress test loan repayments | Especially for SMSFs with limited recourse borrowing arrangements (LRBAs) |
Revisit contribution plans | Maximise unused caps before policy settings shift again |
Seek expert guidance | A licensed SMSF adviser or specialist (like WT Capital) can help you model the impact of rule changes |
Final Thought
Selling SMSF assets during volatile periods is like slamming the brakes in traffic because of a weather report — unnecessary, and potentially dangerous.
If your strategy is sound and your structure is compliant, there’s rarely a reason to panic.
Super is a marathon, not a sprint. And with the right advice, even policy changes can become an opportunity — not a setback.
Need Help Navigating SMSF Uncertainty?
At WT Capital, we help clients build and hold residential property inside their super — with strategies that prioritise long-term growth and regulatory confidence.
Talk to us before making any major SMSF decision.
