More than 11 million Aussies now hold assets outside of their superannuation and primary home, according to a new survey from the Australian Securities Exchange.

The ASX 2026 Australian Investor Study found that while most current investors are still men, the market could soon look very different.

Women dominate the cohort of Aussies who plan to start investing within the next year.

Record 11.5 million Australians now invest outside super

The ASX says the results make Australia a "nation of investors", with this group now comprising 54% of the adult population.

Beyond putting money into property, Aussies are more likely than people in many other countries to buy assets listed on a local or international exchange, like ETFs or shares.

Almost 40% of adults hold these assets bought and sold on exchanges like the ASX, compared to 35% of people in the United Kingdom and 20% of Germans.

Across all types of investing, the median portfolio size is $130,000 and 42% of investors have portfolios under $100,000.

ETFs emerge as the gateway investment

Ownership of ETFs has doubled since 2020, with these managed funds now one of the most popular assets in Australia.

The growth doesn't surprise Betashares senior investment strategist Cameron Gleeson.

He says ETFs have become the gateway from which many people start their investment journey.

"More and more Australians are starting to build a portfolio by looking at ETFs and more and more are choosing ETF-only portfolios," he explains.

The ASX says one third of people who don't currently invest but want to within the next 12 months are considering buying ETFs.

Betashares is one of several companies which manages ETFs for investors and Gleeson says the business has seen growing interest in the assets from a new cohort.

"Through the early COVID-19 period, the growth was in younger investors," he says. "Now we're seeing the greatest growth in older investors."

Why shares remain Australia's favourite investment

Despite all the attention ETFs are getting, the ASX says shares in companies listed on the local exchange remain the most popular type of asset for investors in 2026.

Even among the wave of people planning to start investing within the next year, 41% want to put their money into company stock.

ASX senior manager of investment products Rory Cunningham says this is due to the stability and premium status Aussies attach to certain companies.

"Commonwealth Bank, BHP - these are names that we see day in and day out, so I think that really resonates with investors," he says.

"When you think about investing and as you grow up learning about it, often the example that's provided is investing in a company."

Women lead the next wave of investors

Men still dominate Australia's investor cohort, with only 43% of those currently putting their money to work outside of their home or super found to be women.

But in a sign of change to come, the ASX found women "significantly outnumber" men in the race to start investing in the near future.

Among those the company surveyed who planned to start making moves with their money in the next 12 months, 61% were women.

It's the largest cohort of aspiring female investors the ASX has ever seen.

Cunningham believes this is due to an "incredible evolution" in the ways women can learn about investing.

"Over the last five years, there has been an increase in the number of groups that have a specific focus on educating female investors," he explains.

"These groups are run by women, their membership is female and the education and experience they're delivering is catered towards what women are looking for."

The biggest myth stopping Australians from investing

Experts say initiatives like these will help many of those wanting to invest to get involved, but barriers remain.

One of the most common, according to the ASX, is someone's lack of confidence that they have enough money to buy into the market.

Cunningham believes greater education is needed here too, to make people realise they don't need as much cash as they think.

"Those that intend to invest in the next 12 months are saying that they need a median $690 to do so," he notes.

"But there are investment platforms out there that allow you to invest your spare change, so I think that is a barrier we can overcome."

Reader question

My partner and I are approaching retirement age, but we're not in the position we expected to be in at this stage of our lives.

We still have a sizable mortgage and two children who may need financial support well into adulthood.

We've spoken to several financial advisers, but often feel the conversation quickly turns towards investment products and managing investments, when what we really need is someone to help us step back and look at the bigger picture.

How should we think about the next 10 years of our working lives?

Should we be prioritising paying down the mortgage, building super, investing or simply creating more financial flexibility?

And how do we factor in the possibility that we may need to continue supporting our children financially?

We're not necessarily looking for an investment strategy or a product recommendation.

We'd really value some practical, independent guidance on the options and trade-offs we should be considering while we still have time to make a difference.

What would you suggest we do now? - Martin

Paul Clitheroe's response

Sadly, I hear this a lot, Martin. Too many advisers quickly turn to their best source of revenue and an area they are comfortable with... financial products.

Quite frankly, as you know, investment products are a secondary issue. You need to get your strategy right. I much value the role of advisers, but the bit I point to is the advice, not product sales.

The obvious strategy is for you to create wealth. I have stated the very obvious, so let's break this down.

First up, while I am sure you have done this, your budget. Wealth creation comes from spending less than you earn. Once you know your surplus income, then you can build a strategy.

Roughly speaking, it goes a bit like this.

If your tax rate is above 15% on the top part of your income, salary sacrifice via your employer into super is your best money friend. On a taxable income above $45,000 you pay 32% including the Medicare levy.

So with a $1 earned, you take home 68 cents and it can go into your, at a guess, 6.5% mortgage. Or 85 cents can go into super, with a low-cost balanced fund, these have averaged about 7%pa to 8%pa over many decades.

Strategically, super makes more sense. It makes even more sense if either of your salaries is more than $135,000 where tax plus Medicare levy jumps to 39%.

After super, it is hard to go past paying down your mortgage, via an offset account to give you access to funds if needed. If your mortgage is about 6.5%, each dollar into your mortgage is effectively earning you that 6.5% risk free and tax free.

In your situation, I don't think you need an adviser. I hear your problem; you must create wealth. You do this by managing spending and making a determined effort to save the surplus you have.

If you are higher taxpayers, I suspect the answer is salary sacrifice into a large, very low-cost super fund.

Otherwise, with any excess above the maximum of the $32,500pa, you can both put into super. Then I find it hard to go past an offset account against your mortgage. Where else would you earn the interest rate of your mortgage risk free and tax free?

At times I need to be quite general in my answers, but in your situation the most certain outcome will come from saving as hard as you can and directing your savings to super or your mortgage.

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The investing world is full of jargon, from basic sharemarket terms to complex Wall Street slang. Understanding these investing terms can help you make sense of market moves, analyst commentary and social media investing trends.

Here's a plain-English guide to 50 investing and stock market terms every Australian investor should know.

Stock market terms every beginner should know

All Ords 

The All Ordinaries Index, or All Ords, tracks the 500 largest companies listed on the ASX and is one of Australia's most widely quoted sharemarket benchmarks.

ASX 200

The S&P/ASX 200 tracks the 200 largest companies listed on the ASX by market capitalisation.

Market cap 

Market cap, short for market capitalisation, is the value of a company's outstanding shares and is commonly used to measure a company's size.

Companies are often grouped by market cap:

• Mega cap: $200 billion+
• Large cap: $10 billion+
• Mid cap: $2 billion to $10 billion
• Small cap: $250 million to $2 billion
• Micro cap: Less than $250 million

Blue-chip shares

Blue-chip shares are stocks in large, established companies with a strong track record of earnings and financial stability.

In Australia, companies such as Commonwealth Bank, BHP and CSL are often referred to as blue-chip shares.

Retail traders

Retail traders are individuals who use their own money to buy and sell investments.

Unlike institutional investors, they do not manage money on behalf of others.

Institutional investors

Institutional investors are organisations that invest money on behalf of large groups of people.

Examples include superannuation funds, pension funds, hedge funds and managed funds.

Brokerage

Brokerage is the fee charged by a broker or trading platform when you buy or sell an investment.

Brokerage costs vary between providers and can affect your overall investment returns.

ETFs

An exchange traded fund (ETF) is an investment fund that holds a basket of assets, such as shares or bonds, and trades on a stock exchange.

ETFs can provide diversification at a relatively low cost.

Index fund

An index fund is an investment fund that aims to track the performance of a market index, such as the ASX 200 or S&P 500.

Because they simply follow an index rather than trying to beat it, index funds often have lower fees than actively managed funds.

Diversification

Diversification is the practice of spreading your investments across different assets, industries or markets to reduce risk.

The idea is that if one investment performs poorly, gains in other parts of your portfolio may help offset the losses.

Portfolio

A portfolio is the collection of investments owned by an individual or organisation.

A portfolio can include shares, ETFs, bonds, property, cash and other assets.

Sharemarket movements and investing jargon explained

Bull market

A bull market occurs when share prices are rising or expected to continue rising over a prolonged period.

The term is associated with optimism and investor confidence.

Bear market

A bear market occurs when share prices fall significantly from recent highs, typically by 20% or more.

Bear markets are associated with pessimism and weaker investor sentiment.

Correction

A market correction is a decline of 10% or more from a recent market high. Corrections are a normal part of investing and can occur after markets rise too quickly.

Rally

This refers to a sustained upward movement in the stock prices. Rallies can occur in either bear or bull markets.

Sell-off

A sell-off occurs when a large number of shareholders sell a particular stock. Heavy selling pressure can push a share price lower.

It may happen when there is news about the company, or rumours or lower than expected earnings.

Volatility

Volatility measures how much an investment's price moves up and down over time.

High volatility means larger price swings, while low volatility generally indicates greater stability.

Markets tend to become more volatile during periods of uncertainty or economic stress.

Dead cat bounce

A dead cat bounce is a temporary recovery in a share or market after a steep decline, before prices resume falling.

Crystallise losses

To crystallise a loss means to sell an investment for less than you paid for it. Until you sell, any gain or loss remains unrealised.

Capital gains

A capital gain occurs when an asset is sold for more than its original purchase price.

For example, if you buy shares for $5000 and later sell them for $7000, you have made a capital gain of $2000.

Black swan event

A black swan event is a rare and unexpected event that has a major impact on financial markets.

These events are difficult to predict and often only seem obvious in hindsight.

Catch a falling knife

Catching a falling knife refers to buying a rapidly falling stock in the hope that it will rebound.

The phrase highlights the risk of buying before a share price has stabilised.

Trading and investing strategies you should know

Index futures

Index futures are contracts that allow investors to speculate on the future value of a sharemarket index, such as the ASX 200 or S&P 500. Because they trade outside normal sharemarket hours, index futures are often used as an indicator of how markets may open the following day.

Options trading

Options trading involves contracts that give traders the right to buy or sell an asset at a predetermined price before a certain date.

Options can magnify gains, but they can also increase losses.

Call options

A call option gives the buyer the right, but not the obligation, to purchase a stock or other security at a specified price before a set date.

Short selling

Short selling is a trading strategy based on the belief that the value of a particular stock will fall.

In practice, it could involve a short seller borrowing shares from a broker and then buying them back after the price falls, allowing them to profit from the difference.

Short squeeze

A short squeeze happens when a heavily shorted stock rises sharply in price, forcing short sellers to buy shares to cover their positions and limit losses.

The resulting demand can drive the share price even higher.

Gamma squeeze

A gamma squeeze occurs when heavy options trading forces market makers to buy shares, pushing the stock price higher.

This can create a feedback loop that accelerates gains.

Day trading

Day trading is the practice of buying and selling shares or other assets within the same trading day.

Day traders aim to profit from short-term price movements rather than long-term investing.

Multibagger stock

A multibagger is a stock that increases several times above its original purchase price.

For example, a five-bagger has increased fivefold since it was bought.

Markets and the economy explained

AUD and the exchange rate

The Australian dollar (AUD) fluctuates in value against other currencies, particularly the US dollar.

The Australian dollar (AUD) is often viewed as a commodity-linked currency because Australia's economy is heavily exposed to exports such as iron ore and coal.

If the dollar falls, it makes Australian exports cheaper for overseas buyers and imports more expensive for Australians.

Bonds

Bonds are investments that involve lending money to governments or companies in exchange for regular interest payments and the return of your original investment at a set future date.

Bonds are generally considered lower risk than shares, although their value can still rise and fall.

Investors often use bonds as defensive assets within a diversified portfolio.

Dividend

A dividend is a payment some companies make to shareholders from their profits.

Dividends are typically paid in cash, though some companies offer additional shares instead. Not all companies pay dividends, with some choosing to reinvest profits back into the business.

Yield

Yield is a measure of the income generated by an investment, usually expressed as a percentage.

For shares, yield is most commonly based on the annual dividend payments relative to the share price. For bonds, it refers to the return an investor receives from holding the bond.

Gold

Gold is often viewed as a defensive asset and may perform well during periods of market uncertainty, although its price can be volatile and there are no guarantees it will rise when shares fall.

Oil

The price of oil can have a severe impact on the economy; for consumers, fuel can be one of the largest purchases of the week.

The price at the pump is determined by supply and demand in the global market.

Changes in global oil prices can influence petrol prices, although the relationship is affected by factors including refining costs, exchange rates, distribution costs and retail competition.

Defensive assets

Defensive assets are generally lower risk and lower return investments that can help cushion a portfolio during market downturns.

Defensive assets include cash, fixed interest, bonds and gold.

Circuit breakers or market halts (NYSE)

On rare occasions, where the market falls dramatically in a single day there are systems in place for the market to halt trading to stop a total market crash.

Typically these halts will last around 15 minutes to give people time to absorb information, analyse it and make more rational decisions.

Here's how they function: if the S&P 500 falls 7% from the prior day's close, it triggers a 15-minute trading halt.

If the S&P 500 falls 13% before 3.25pm, trading halts again for 15 minutes. If the S&P 500 falls 20%, all trading remains halted for the rest of the day. These systems have a long history.

Recession

A recession is commonly defined as two consecutive quarters of negative economic growth, measured by gross domestic product (GDP).

Recessions are typically associated with rising unemployment, weaker consumer spending and reduced business investment.

Governments and central banks may respond with measures designed to support economic activity, such as lowering interest rates or increasing public spending.

A global recession refers to a significant downturn in economic activity across multiple countries.

Global financial crisis (GFC)

The global financial crisis (GFC) refers to the period of extreme stress in global financial markets and banking systems between mid-2007 to early 2009.

It was triggered by the collapse of the US housing market and the widespread use of risky sub-prime mortgages that were bundled into complex financial products and sold to investors.

Home buyers were given loans they were unable to pay back, and the loans were sold through complex products called mortgage-based securities to unsuspecting investors.

Meme stock and Reddit investing terms

HODL

HODL is a misspelling of "hold" that became a popular investing term meaning to keep an investment despite market swings.

It is commonly used by cryptocurrency and meme stock investors.

Diamond hands and paper hands

Diamond hands refers to holding an investment despite large price swings or pressure to sell. It's often accompanied by diamond emoji symbols on social media.

The opposite of having diamond hands is paper hands, a slang term for an investor who sells an investment quickly, especially during periods of volatility or price declines.

To the moon

To the moon is a phrase used online to express enthusiasm that a stock, cryptocurrency or other investment will rise sharply in value.

It is often accompanied by rocket emojis and became popular during the GameStop saga.

Meme stocks and WallStreetBets

Meme stocks are shares that gain popularity through social media, online forums or viral investor communities rather than traditional company fundamentals.

Their prices can rise or fall dramatically as retail investors pile in.

One of the best-known communities is WallStreetBets, a Reddit forum that became globally famous during the GameStop short squeeze and helped bring meme stock investing into the mainstream.

Dumb money

Not just the name of a 2023 film, dumb money is a pejorative for retail investors (or their investments), while "smart money" is used to describe institutional investors.

Bag holder

A bag holder is an investor who continues holding a stock after its value has fallen sharply.

The term suggests the investor is left carrying losses while other investors have exited.

Wall Street slang and risk warnings

Fallen angel

A fallen angel is a company, stock or bond that was once highly regarded but has experienced a significant decline.

Some investors view fallen angels as turnaround opportunities.

Greater fool theory

The greater fool theory suggests investors can profit from overvalued assets if they can sell them to someone willing to pay an even higher price.

The strategy relies on finding a "greater fool" rather than on an asset's underlying value.

Widow maker trade

A widow maker is a notoriously risky trade or investment strategy that has caused substantial losses for many investors.

The term is often used for trades that repeatedly catch investors out.

Pump and dump scheme

A pump and dump scheme is a form of market manipulation in which false or misleading information is used to inflate a stock price.

The perpetrators then sell their holdings at the higher price, often leaving other investors with significant losses.

Fund managers are a competitive bunch, so you don't often see them in the same room. After all, it might mean letting slip a great idea they don't want to give away.

Finance website LiveWire corralled some of Australia's best into the Art Gallery of NSW this week for a live audience of over 300 people.

The presenters manage billions for everyday Australians. Some of that money might even be yours.

Funds management is never an easy job, but especially now.

Rate hikes are hitting consumers and rattling property, inflation is pressuring bond markets and oil lurks dangerously around US$100 a barrel.

There were five key takeaways for you and me.

1. Don't look to the banks for capital growth... and watch out CBA

The economic backdrop is turning against the banks.

Property is falling, mortgage rates are rising, and credit growth is now going backwards. That puts pressure on bank earnings from multiple directions.

No one made a contrarian case to hold or buy them.

Last year CBA reached a valuation that made it the most expensive bank in the world.

Value investor Dougal Maple-Brown said it has a long way to deflate.

If Maple-Brown's view proves correct, CBA's share price could ultimately fall by as much as 50% from its peak. It would only need to trade at the same price-to-earnings ratio as the other big three banks to get there.

It could even get worse.

The firm's exposure to banks is at its lowest level in 40 years.

This is a major issue for many Australians because Bell Potter data shows financials are still the biggest holdings for most.

2. Property to stay under pressure as the Aussie consumer gets squeezed

If you have a contrarian streak, now might not be the time to let it out when it comes to Aussie property or derivatives of it, like the retail and building sectors.

Damien Boey of Wilson Asset Management warned the real estate slide is eroding Australia's financial buffers. James Hawkins of L1 Capital said the state of property is "much worse" than people think.

There is also the issue of the RBA rate-hiking cycle, which may not be done until mid 2027.

There's no potential relief in sight here for quite some time.

3. AI is a 'boom, not a bubble'

If there was one man who electrified the room, it was Nick Griffin of global investment firm Munro Partners.

He brings one unshakeable conviction to everything: AI is the transformative shift of the next decade.

You and I "are going to have to deal with it" in one way or another. That's because the capital expenditure happening here is "getting into everything".

That's not all. You, me and everyone else are now going to Claude and ChatGPT directly, and bypassing the old platforms, weakening business models as we go.

You will empower AI agents with this shift. As a consequence, as a group, we're ramping up compute demands on the global AI infrastructure, measured in token use, which is going parabolic.

Griffin's view is that even this is probably only about 5% of what the world will eventually use as AI encroaches into every industry. You already know the beneficiaries: semiconductors, the cloud, power and cooling.

He adds that this trade is not over. The hyperscalers are generating the revenues to justify the gigantic buildout. The demand for AI is essentially infinite at this point.

Hence the upcoming blockbuster IPO of Firmus on the ASX. It's also why, in Australia, "resources outperform banks".

4. A new resource boom not dependent on China

Even if AI demand wasn't going parabolic, resources would offer a compelling proposition.

More than a decade of underinvestment is colliding with rising demand from deglobalisation, decarbonisation and defence spending.

The voice of experience came out here, with 40-year veteran Daniel Sullivan saying the outlook was "phenomenally positive".

He lived and invested through the China boom, and is seeing the same signals.

The bottleneck this time? Critical minerals.

Ben Griffiths argues Australia is on the verge of an enormous gas boom to feed the rapidly growing electricity demand.

The natural resources sector is one of the few parts of the market that can bypass Australia's domestic economy and tap into the powerful global forces building now.

5. Farming cows in the 21^st century, and more like it

Blackbird Ventures is a venture capital firm that takes specialised bets in high-risk areas.

One was a $3 million initial investment into Canva. You might know it. Canva turned into a billion-dollar unicorn.

Blackbird Partner Samantha Wong talked about another success: a company called Halter.

They built a collar for dairy cows. It runs on solar and AI to do the work of a 19th-century cowboy.

Sound fantastical? It began that way.

Her point: new business can come from unexpected combinations and it may not be obvious that it's going to work for a long time.

Both Canva and Halter remained uncertain prospects that, in hindsight, can get forgotten.

The biggest returns, however, will always come from new ideas that break open new markets.

Don't give up on them too soon.

Few stories capture the challenges of long-term investing quite like Homer's The Odyssey.

In Homer's tale, it takes Odysseus 10 years to make it back to his homeland after the Trojan War. Seven of those years are spent in the rather pleasant embrace of the immortal nymph Calypso.

Maybe we could compare those years to investing on the ASX, where time slips by, markets drift sideways, and you wonder whether you've achieved anything at all.

Everyone wants to talk about the next 10% move on the ASX. Nobody wants to talk about the next 30 years. Yet that's the journey most investors are actually taking. They're trying to get home to Ithaca.

Homer wrote about it nearly 3000 years ago. Not the sharemarket, obviously, but about the long road home, the distractions, the disasters, the lucky escapes and, above all, the importance of simply keeping going.

The Odyssey is investing? Ithaca is retirement?

Then it isn't about beating the market every year. It is about reaching financial independence. It is about arriving.

After all, The Odyssey finishes when Odysseus gets home to his wife, Penelope, his son, his dog, and, finally, his own bed.

Why staying invested beats timing the market

Homer's story begins after the Battle of Troy has been won. Now comes the difficult bit, getting home.

In investment terms, starting is easy. Staying the course for decades is the real challenge.

Poseidon and the sea are the markets. Completely indifferent to your plans.

Markets don't care about your retirement. They don't even know you exist. They simply produce storms from time to time.

Then we reach the Land of the Lotus Eaters, where complacency takes hold.

It is easy to see a modern parallel.

Global markets sit close to record highs despite higher bond yields, sticky inflation, elevated oil prices and AI valuations that are beginning to stretch credibility. It is tempting to believe everything will simply work out.

Who can blame Odysseus for being distracted by the Lotus Eaters?

Never checking your super, leaving too much money sitting in cash, or assuming someone else will take care of your retirement. Comfort is seductive. Years disappear quickly.

Odysseus eventually realises that comfort without progress is simply another form of failure.

The behavioural mistakes that cost investors money

Then come the Sirens.

The Sirens today don't sing from rocky islands, they appear on social media promising "20% annual returns". Bitcoin. Meme stocks. The latest AI darling. Every generation has its Sirens, singing songs of riches.

Everyone hears them. Many investors are tempted.

Odysseus asks his crew to tie him to the mast. He still heard the songs.

Good investors need the same discipline. Asset allocation. Position sizing. Risk management. Systems that stop emotion taking over.

The trick isn't avoiding temptation. It's surviving it.

Then come the sea monster and the whirlpools, Scylla and Charybdis.

Sometimes investing presents no good choices. Do you buy the dip? Raise cash? Hold your nerve?

Sometimes every option carries risk. Sometimes we have to choose the least bad outcome.

Investing can be the same. Sometimes success is simply losing less than you otherwise would have.

Then we meet the Cyclops.

This is hubris. The belief that every investment decision is brilliant and every success is due entirely to your own genius.

Odysseus defeats the Cyclops through guile rather than strength, but even then there is a sting in the tail.

Markets have a habit of humbling the overconfident just when they think they have everything worked out. Every bull market creates a few Cyclopes.

Then there is Circe who turns men into swine.

We have all got those stocks that have turned from a great idea into a dog or a long-term hold.

Our own investing journeys are also buffeted by the winds of behaviour. Selling winners too early. Hanging on to losers in the hope they recover.

Behaviour destroys far more wealth than markets ever do.

Why patience is every investor's superpower

Then we have Penelope.

She is a wonderful metaphor for patience. She quietly waits, weaving her tapestry while the years pass. She isn't distracted by the suitors. She plays the long game. She trusts that eventually the journey will end.

Compounding is rather like Penelope. Quiet. Unexciting. Relentless.

Along the way, Odysseus is guided by Athena, the goddess of wisdom.

Every investor needs an Athena. Not someone who predicts markets, but someone who encourages sensible decisions and filters out the noise.

Good advisers don't eliminate storms. They simply help you sail through them.

At the end of the story comes the final test. Odysseus alone can string his great bow and fire an arrow cleanly through the axe heads.

Investing is much the same. Only you can complete the journey.

Experience matters. Pure strength isn't enough. It takes knowledge, discipline and perspective to reach your destination.

Reaching your own Ithaca

By the time Odysseus reaches Ithaca, he has endured shipwrecks, storms, monsters, mutinies and painfully slow progress.

Yet through it all, he never loses sight of where he is trying to go.

This, perhaps, is the biggest lesson for investors.

Retirement isn't won by finding the next tenbagger. It is achieved by surviving long enough to arrive.

The greatest risk to an investor is rarely the market. It's abandoning the voyage.

That's a lesson Homer understood long before there were stock exchanges.

ASIC commissioner Simone Constant says the regulator is now "beyond warnings" and pushed players to assess themselves against its 10 best practice principles.

Constant says ASIC expects everyone in the investment chain - fund managers, deal underwriters and trustees right through to valuers, auditors and ratings agencies - to consistently meet their responsibilities.

Private credit has grown rapidly in recent years as investors have looked for higher returns than traditional fixed-interest investments. Private credit funds typically lend money directly to businesses and property developers rather than through traditional banks.

The recent collapse of property developer Bathla put a spotlight on risks within parts of the private credit market and prompted some investors to pull money from private credit funds.

Constant says funds that allow investors to withdraw money regularly while holding assets that can take years to sell or repay face a fundamental problem that must be resolved.

One of ASIC's key concerns is that some funds allow investors to withdraw money regularly even though the underlying loans and assets may take years to repay.

"Offering regular redemptions to investors while holding illiquid, multi-year property loans creates a fragile product design that breaks down under pressure - especially when coupled with loan "management practices" that rearrange deck chairs while the tide goes out and the boat risks running aground," she says.

She says that when property projects stall and credit vehicles freeze redemptions, the damage falls squarely on the real economy.

"Contractors and trade subcontractors are left unpaid, homebuyers face the distressing prospect of losing their deposits, and superannuation members find their retirement savings locked away. The damage also falls on investors."

The warning is particularly relevant for super fund members because many large super funds have increased their exposure to private credit in pursuit of higher returns.

Constant says ASIC is worried the sector's engagement might be "too little, too late" if participants don't move with urgency towards consistent good practice. She urged the sector to strengthen standards now before problems undermine investor confidence.

"If you are a private credit fund who hasn't assessed yourself against our 10 principles of private credit done well, ask yourselves - why not? Before your investors do," Constant says.

"The clock is ticking. Whether we see broader credit stress or not, certainly the tide is going out on poor private credit practices. The collapse of Bathla reinforces why strong governance, effective oversight, clear disclosure and accurate valuations are critical."

Another concern for ASIC is whether some funds are accurately valuing loans, particularly when borrowers are under financial pressure.

"Fund managers need to review loan portfolios and apply realistic, independent valuations," Constant says.

"Carrying distressed loans at full face value to protect management fees is unacceptable."

Constant says while the Bathla collapse is deeply concerning, for ASIC it has not been surprising.

"We've been talking about private credit for a long time now - specifically about the risks stemming from inconsistent industry standards that haven't kept pace with the growth, significance, complexity and connections of the sector," Constant says.

"What we're seeing now, as some of those weaknesses are tested at scale for the first time by current conditions, are the first significant cracks - the first stress fractures - beginning to emerge."

Constant also called on institutional investors and superannuation trustees to not accept private credit managers at face value.

"Trustees have clear statutory obligations to act in their members' best financial interests. Fulfilling that duty requires genuine, look-through due diligence," she says.

"Trustees must look past headline returns, examine the underlying collateral, verify bad-debt provisioning, and independently test manager assumptions before committing member capital."

This article first appeared on Financial Standard

Reader question

Hi Paul,

We are immigrants and are investing in a landscape that is unfamiliar. We moved here after all our children became Australian citizens.

We are now too, at the age of 74 and 67.

We live in a granny flat and contributed to a house big enough for three generations.

Now we need advice about where to invest and earn a monthly income for our living expenses. We will not receive a pension for about 10 years.

We have $600,000: $100,000 in a high-interest savings account, $250,000 to $300,000 in super, and the remainder in ETFs.

I need to keep fees low with a good return. Can you help with information on super funds and companies with low-cost ETFs?

Am I on the right track? - Elizabeth

Paul Clitheroe's response

We have something in common, Elizabeth, except at very different times in our lives.

My parents moved to Australia as 10-pound Poms way back in 1963 when I was eight and my sister was four. I do remember it took my parents some time to understand the financial environment here, particularly our quite peculiar tax system.

We also live with three generations in our family home. Our middle daughter moved back home with her husband and two children while they build a new house.

For our readers wondering about the 10-year wait for an age pension when you are both at qualifying age, this is not an income or assets issue. It is the newly arrived resident's waiting period.

I'd have to steer you to a financial adviser for specific advice, but in broad terms I don't see a problem generating $30,000 a year, plus Christmas presents for the kids and grandkids, from $600,000.

You only need to generate 5% a year on your $600,000 to do this. If investing in joint names, tax should not be a major issue.

Frankly, I think you have an excellent plan. I'd do something similar.

It is a good idea to keep about $100,000 in a super-safe, high-interest bank account. I imagine you would earn more than 5% on that, so there is about $5000 a year to start with.

But we do need to think about inflation.

Super is a terrific asset for retirees, but I am definitely going to direct you to an adviser, or the advice team offered by major super funds.

Obviously, I'd want you in a large, low-cost super fund and, given your cash reserves of $100,000, I'd suggest you talk to them about a balanced investment option.

I suspect a pension from super may be the way to go, but talk to your chosen fund and seek advice. If a pension is the right option for you, there is another 5% being paid to you on, say, $300,000. That is another $15,000 a year.

Finally, yes, a low-cost ETF is a good way to get global diversification for incredibly low fees. As a starting point, you could look at Betashares, Vanguard and iShares, although there are plenty of providers.

About $200,000 will give you excellent global diversification and, at about 3% income, another $6000 or so in annual income.

This would leave you a little short of your $30,000 target, but you could comfortably look at a higher-income ETF, draw a little more from super, or supplement your income from your $100,000 cash reserve.

The key point here is that you are not asking for miracles. A return of 5% a year from a balanced portfolio, plus some inflation protection, is historically a very conservative objective.

I hope you enjoy this beautiful country as much as I have.

What to read next

• What is an ETF? A beginner's guide to exchange traded funds
• Paul Clitheroe: From England to Australia
• Are you beating the average? How much Aussies have in super
• How to live with extended family without drama
• Ask Paul: I grew up poor, now I'm worried my kids are spoilt

Could the next financial crisis already be sitting inside your superannuation account?

It sounds alarmist, but regulators are increasingly asking the question as Australia's private credit market has grown to around $250 billion.

What was once a niche corner of finance has become one of the country's fastest-growing sources of funding.

Most Australians have probably never heard of private credit. Yet many could already have exposure through their superannuation. ASIC has repeatedly highlighted the growing connection between private credit and the super sector, warning investors to better understand the risks involved.

The recent collapse of Bathla Group, which entered administration owing approximately $3.4 billion to creditors, has thrust those risks into the spotlight, but Bathla is not the real story.

The real issue is that many of the conditions that could place pressure on private credit are already emerging.

Interest rates remain elevated, inflation has proven more persistent than many expected, construction costs remain significantly higher than before the pandemic and parts of the property market are beginning to soften.

At the same time, developers who borrowed heavily during years of ultra-low interest rates are being forced to refinance at much higher borrowing costs.

That matters because more than half of Australia's private credit lending is tied to property development and construction.

In a rising property market, those risks can remain hidden. However, when borrowing costs stay high, property values soften and developers struggle to access fresh funding, pressure begins to build across the entire system, and that is where the risk to superannuation begins.

Australia's $250 billion private credit market has never been tested by a severe downturn at anything close to its current size. If several major developers fail within a short period, fund managers may be forced to write down the value of their loans.

Those write-downs could then trigger redemption requests from investors seeking to reduce their exposure.

The problem is that many private credit assets cannot be sold quickly or easily. What appears liquid in good times can become extremely illiquid in bad times.

When investors want their money back, someone has to buy the underlying assets. If there are few buyers, prices can fall rapidly, forcing further write-downs and creating a self-feeding cycle.

Sound familiar?

The Global Financial Crisis in 2008 was not simply about falling property prices. It became a crisis when investors realised much of the property-linked debt they owned was worth far less than expected and there were very few buyers when everyone wanted to sell.

Today, ASIC is warning of the sector's "first significant cracks", while the Reserve Bank has raised concerns about transparency, leverage and visibility of risk within private credit markets.

So, the big question is: are the same ingredients that fuelled the GFC beginning to emerge again?

Higher interest rates, refinancing stress, weakening property markets and growing private debt are already putting pressure on borrowers. If those trends continue, the real risk is that Bathla won't be remembered as an isolated collapse, but as the first domino to fall.

Best and worst sectors

Energy was the best-performing sector this week, rising more than 3% as escalating Middle East conflict pushed Brent crude above US$100 a barrel.

Supply disruptions supported oil prices, providing a tailwind for Australian oil producers.

Utilities gained 0.27% as investors sought more defensive businesses while the broader market sold off.

Materials rounded out the top three, down 0.29%, as the broader sell-off caught major miners amid inflation and interest rate concerns. However, record copper prices supported miners earlier in the week, helping cushion the sector's decline.

At the other end of the market, Information Technology was the weakest sector, falling more than 6% as rising oil prices fuelled inflation and interest rate fears, weighing on sector heavyweights such as Xero and WiseTech.

Consumer Discretionary was the second-worst sector, dropping more than 4% as higher fuel costs and interest rate fears threatened household spending.

Consumer sentiment also dropped 5.2%, adding to concerns that Australians would cut back on non-essential purchases.

Consumer Staples rounded out the worst performers this week, falling more than 3% as it was caught in the broader sell-off, with oil-driven inflation and interest rate fears weighing on shares.

Best and worst stocks

Whitehaven Coal led the ASX Top 100 this week, climbing more than 5% as Middle East energy disruptions supported the outlook for coal demand.

The IEA now forecasts record global coal consumption in 2026, reinforcing that backdrop.

Downer EDI followed, rising 3.92% as ongoing share buybacks may have helped support its rise this week, with the company reporting further purchases of its own shares.

Santos rounded out the leading performers, gaining 3.9% as escalating Middle East tensions pushed oil prices higher and supported its earnings outlook.

At the other end, Xero was the weakest performer, falling more than 13% as oil-driven inflation and interest rate fears weighed on technology stocks.

Higher rates reduce the value investors place on future earnings, pressuring growth companies such as Xero.

Westgold Resources followed, falling more than 10% despite a strong week for gold stocks.

Having outpaced the gold price in recent weeks, its pullback could reflect short-term profit-taking rather than a more serious change in trend.

WiseTech Global rounded out the worst performers, falling 9.87% and getting caught in this week's retreat from growth stocks as rising oil prices reignited fears of further rate hikes.

All Ordinaries Index update

The All Ordinaries Index sold off again this week, falling more than 2% by Thursday's close as escalating conflict in the Middle East and rising oil prices weighed on sentiment.

The index is now sitting near the critical 9000 level, making this a genuine make-or-break point for the market.

The significance of 9000 goes beyond it being a major psychological support level. It also aligns with the longer-term uptrend established from the March 2026 low, which the market has respected ever since.

If buyers step in and drive a strong rebound, this decline may ultimately prove to be another healthy correction within the broader uptrend.

However, a decisive break below both 9000 and the uptrend would send a far more concerning signal.

Unsurprisingly, Information Technology led the market lower, falling more than 6%.

Technology is one of the market's more risk-sensitive sectors, making it particularly vulnerable when oil prices rise, uncertainty increases and investors become less willing to hold higher-growth stocks.

Next week should provide greater clarity.

The market will either find support and rebound or break lower, with the outcome potentially determined by events unfolding thousands of kilometres away. For Australian investors, 9000 is now the level that matters most.

Private credit, in other words, non-bank lending, has been around for decades. It's attracting particular attention right now though as demand for lending and strong investor interest has pushed the Australian market past the $200 billion mark.

This growth has seen a mushrooming of new entrants to the market. On the face of it, this is giving investors looking for attractive yields and regular income, the benefit of more choice.

However, as Shelby Clark, executive director of operations at Knox Funds, formerly GPS Investment Funds, cautions, "We are seeing a rush of inexperienced companies come into private credit, and their lack of experience can put investors' money at risk."

Knox Funds has been in the market for more than 30 years, and only lends for residential property developments in the South East Queensland area. Other private credit funds are backing very different projects, some with higher risk and less transparency about how investors' money is being used.

Clark, a keen advocate for consumer education, says there are several key factors investors need to weigh up when it comes to selecting a private credit fund:

• The experience of the fund provider
• The underlying assets of the fund, and
• The security the provider has over those assets.

Experience matters

As a market veteran of more than three decades, Knox Funds recently rebranded from GPS Investments. As Shelby Clark points out, "Our name may have changed but our depth of experience hasn't."

And in a sector where so many new funds are coming on board, that experience matters.

"Every industry will experience volatility," says Clark. "What investors need to determine is whether they are choosing a fund that has dealt with volatility before, and so knows how to manage it."

John Cachia, founder and CEO of financial advice firm Thriving Wealth, believes today's cost-of-living pressures and higher interest rate environment may see more investors turn to income-producing options like private credit.

He too says it's important to look beyond the advertised yield and consider "factors such as the fund manager's track record".

Know how your money is being used

When you invest in private credit, you are essentially providing funds to be loaned to a variety of borrowers for a variety of purposes.

Clark says it's critical to understand what a private credit fund is investing in, and know what the underlying assets are.

"Investors need to be wary of underlying assets that are in a volatile market or are a current 'fad' that may not survive the test of time," she explains.

Shaun Ganguly, founder and principal adviser at Prime Years Financial Planning, agrees.

"Private credit is not a monolith, and it's absolutely vital to know what you're getting into," he says. "What are the fund's underlying assets? How does it make the money? Is it lending against property, small businesses or something else?"

According to Ganguly, "the underlying asset matters the most".

He cites the example of a first mortgage with a low loan-to-value ratio (LVR) over a metropolitan commercial property, which Ganguly says would have a completely different level of risk compared with an unsecured loan to a fledgling small business.

"One is backed by a real asset with an equity buffer behind it. The other relies on the health of the business and carries more risk," observes Ganguly. "On a risk-adjusted basis, they are chalk and cheese."

While close to half the finance provided by private credit in Australia is real estate-focused, each fund's underlying investments should be clearly spelled out in the product disclosure documents.

The catch is that some funds are more transparent than others.

Clark explains, "Knox offers six funds, all are backed by residential property developments in South East Queensland.

"Not only can investors see the projects we are funding on the Knox website, the Knox Providence Fund allows investors to choose exactly which development they would like to help fund. This gives investors next level control over what they invest in, and it's popular with people who see a suburb they are familiar with and believe will sell well."

The remaining funds, including retail options Knox Fortitude Fund and Arkus, pool investors' money across a range of South East Queensland-based property developments.

Now both are being wound back.

So if property won't deliver the same tax breaks as before, where should investors be looking next?

In this episode of Friends With Money, Vanessa Walker sits down with finance writer Nicola Field to unpack the biggest investing shake-up in years. They discuss the winners and losers, why ETFs could become even more popular, and the surprising investment making a comeback.

They also explain what investors should be thinking about before the new rules kick in on July 1, 2027.

Episode timestamps

00:00 Why Australia is changing the tax rules

01:07 The government's goals

02:28 What changes are actually happening?

03:45 What it means for shares, ETFs and managed funds

04:12 Investments that could benefit

05:00 Why investment bonds are making a comeback

05:34 ETFs versus individual shares

07:09 What investors should do before 2027

08:43 Investing ideas for Gen Z

09:29 Why ETFs appeal to millennials

09:57 Opportunities for Gen X

10:38 Ideas for baby boomers

10:53 Is super still the best investment going?

12:01 How to invest for maximum after-tax returns

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

The social media pages of prediction platform Polymarket present streams of updates that wouldn't be out of place on any standard news website.

The service "transforms headlines into live markets," letting you bet on the outcome of real-world events, from political decisions and interest rate movements, to pop culture news and sports results.

But the platform also lets you stake money on what Karoline Thomsen labels "gruesome topics", like military actions and strategic shifts in ongoing wars.

"Tragically, that might be some of the appeal," says the PhD researcher, who has been studying Polymarket.

Case in point is Polymarket's rise to prominence earlier this year: as tensions escalated between the US and Iran, the New York Times reported hundreds of Polymarket users were wagering thousands of dollars on when American forces would strike the Middle Eastern country.

What are prediction markets and how does Polymarket work?

Online exchanges where punters can try their luck reading the course of global events have boomed in the last few years.

Polymarket is the best-known of these prediction platforms and was launched in 2020. Its leading competitors include Kalshi and PredictIt.

In a sign of a growing industry, several news outlets reported in June that Facebook owner Meta was exploring launching its own prediction product. The company didn't respond to a request to confirm these reports.

Platforms let users place bets anonymously and transactions are usually made in cryptocurrency.

Unlike most traditional gambling, the odds on these sites fluctuate depending on dynamics of supply and demand and the appetite of users to take differing views on event outcomes.

Why is ASIC warning Australians about prediction markets?

Anyone accessing the internet in Australia is blocked from using Polymarket, as it's considered an illegal gambling website, but the financial regulator ASIC says it and other platforms are trying to attract local users by taking bets on events happening here.

ASIC says Australians considering jumping onto any prediction markets should be aware of "three big risks" that can make them a dangerous play.

1. It's gambling, not investing

Polymarket and other major prediction sites tend to refer to bets as "contracts" between users and Thomsen says the way they present their odds and other information can give them the appearance of investing platforms.

"Polymarket has really put some work into placing itself to look like a financial and information instrument, rather than a gambling instrument," she says. "They show price fluctuations in a graph that's not dissimilar to the one you see on the stock market."

Behavioural economist Phil Slade says putting money on global events with this information at your fingertips can feel like making a wise investment.

"It feels smart, not risky...we get a dopamine hit that an investment would never be able to do," he says.

In reality, prediction markets are much closer to gambling than investing. Warning of the large sums people can lose, ASIC has compared them to binary options: a financial product banned in Australia since 2021.

Binary options were similarly dressed-up to look like investment opportunities, but were essentially bets on future asset prices or other economic events.

ASIC banned their sale after finding 75% of people who had traded them had lost money.

2. It's an uneven playing field

Most prediction markets allow users to make bets anonymously, meaning you could be taking a stake on an event against someone who knows much more about it than you do.

In April, it was revealed a US soldier with access to classified military plans had used them to bet against regular punters on Polymarket, winning hundreds of thousands of dollars.

Then, in July, a US politician was fined for making bets on whether he would attend an event or not - something entirely within his own control.

Experts say these are prime examples of the serious disadvantages ordinary punters can find themselves at, as they trade bets with anonymous people on outcomes the opposite party has inside knowledge about or controls completely.

"It seems to be a model specifically targeted towards incentivising insider trading... if you've got knowledge about the future, then then why wouldn't you get onto a prediction market and make a bet?" notes Slade.

3. You're not protected

Despite styling themselves as investment platforms, no prediction market holds an Australian Financial Services (AFS) licence.

"That means you won't have access to important protections if something goes wrong," explains ASIC Commissioner Alan Kirkland.

These missing protections include mandatory internal dispute resolution processes and client money safeguards.

ASIC says you should check whether any financial services provider you're considering making an investment with has an AFS license before handing over any money.

On this episode of the Friends With Money podcast, Money's Tom Watson is joined by Justin Lin, investment strategist at Global X ETFs.

They discuss the latest price movements and what could lie ahead for the crypto market.

Episode timestamps:

00:00 Introduction

01:45 Bitcoin and Ethereum performance in 2026

02:55 What's been driving the downturn?

05:15 How Australian investors are reacting

07:45 Crypto battles AI for investor attention

09:20 Institutional demand and ETF adoption

11:00 The long-term investment case

13:45 Outlook for the second half of 2026 and beyond

14:55 Conclusion

Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

Where can I listen to the podcast?

You can listen on Apple Podcasts, Spotify, or YouTube (with closed captions available).

Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

Is the podcast suitable for beginners?

Yes! It's designed to be accessible for beginners while still offering valuable insights for seasoned investors.

What topics does the podcast cover?

The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

How often are new episodes released?

New episodes are released weekly, so you can stay up to date with the latest financial tips and trends.

Can I watch episodes with captions?

Yes, full episodes with closed captions are available on YouTube.

Why subscribe to the Friends With Money podcast?

Boost your financial literacy anytime, anywhere with the Friends With Money podcast from Money magazine. Whether you're commuting, working out, or relaxing at home, this weekly podcast makes it easy to grow your money knowledge on the go.

Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

Subscribe to the Friends With Money podcast today and start learning when it suits you.

When Australians think about investing, they usually focus on one question: "What will give me the best return?"

Soon, they may need to ask another one. "How will it be taxed?"

The Federal Government's proposed capital gains tax (CGT) reforms represent one of the biggest changes to Australia's investment landscape in decades.

From July 1, 2027, the long-standing 50% CGT discount is set to be replaced with an inflation-based system, alongside a minimum 30% tax rate on capital gains.

Existing gains accrued before that date will generally remain subject to the current rules, while gains accruing afterwards will fall under the new regime.

While much of the public debate has focused on whether investors will pay more tax, I think the more interesting question is this:

How will these changes influence the way Australians invest?

Because tax policy doesn't just change tax bills. It changes behaviour.

Over the years, we've seen firsthand how Australians adapt whenever tax rules change.

While every investor's circumstances are different, one thing remains consistent: once the tax implications become clearer, people naturally reassess how and where they invest.

Investors have always adapted

One thing I've learned after advising investors for many years is that they rarely stand still when tax rules change.

When superannuation rules are tightened, people contribute differently.

When stamp duty changes, buyers adjust their timing.

When depreciation rules change, investors rethink renovations.

Capital gains tax will be no different.

I don't expect Australians to stop investing. I expect them to invest differently.

How the proposed CGT changes could affect property investors

Property has long been Australia's favourite investment.

Part of that is cultural. Australians like owning bricks and mortar.

Part of it is financial. Property offers leverage, rental income and historically strong long-term capital growth. And part of it has been tax.

The combination of negative gearing and the 50% CGT discount created a powerful incentive to accept lower rental returns today in exchange for larger after-tax capital gains tomorrow.

As those tax settings change, that equation changes too.

Does that suddenly make residential property a bad investment? Absolutely not.

Good property in desirable locations will still have the same fundamentals it had yesterday.

Population growth, housing shortages, infrastructure spending and local demand don't disappear because tax legislation changes.

But I do think future investors will become much more selective.

Why rental income could become more important

For years I've met investors who were happy to buy a property producing very little rental income because they believed future capital growth would outweigh the ongoing losses.

Some of those investments worked brilliantly. Others relied almost entirely on favourable tax treatment.

Under the proposed rules, I think investors will place much greater emphasis on cash flow, higher rental yields, lower holding costs and stronger income generation.

Rather than simply asking, "How much will this property be worth in twenty years?", investors may increasingly ask, "Can this investment pay for itself along the way?"

That's not necessarily a bad outcome. It encourages more disciplined investing.

Could dividend shares become more attractive under the new CGT rules?

One trend I wouldn't be surprised to see is greater interest in listed investments.

Shares have always offered several advantages over property. They're easier to diversify, they're easier to buy and sell, and transaction costs are lower.

Investors can build portfolios gradually rather than borrowing hundreds of thousands of dollars from day one.

Australia's dividend imputation system also remains one of the most generous in the world.

If investors become less focused on chasing capital gains and more interested in generating reliable after-tax income, dividend-paying Australian shares could become even more attractive. Recent commentary already suggests many investors are reassessing the balance between growth assets and income-producing investments in response to the proposed reforms.

Why diversified investors could benefit

One behavioural change I hope these reforms encourage is diversification.

Australia has long had an unusually high concentration of household wealth tied up in residential property.

That's understandable.

Property has served many Australians well.

But concentrating too much wealth in a single asset class also creates risk.

A more balanced portfolio might include:

• Australian shares
• International shares
• Listed property trusts
• Fixed interest
• Cash
• Direct property

I've always encouraged clients to think about building wealth across multiple asset classes rather than relying on one investment to do all the heavy lifting.

Tax changes may simply reinforce that message.

Don't let tax become your investment strategy

One mistake I've seen repeatedly over the years is investors allowing tax to drive every decision. They buy a negatively geared property because the tax deduction looks attractive, hold an investment they no longer want because they don't want to pay CGT, or sell purely because they fear future rule changes.

Rarely do those decisions produce the best financial outcome.

Good investing has always been about fundamentals, quality assets, reasonable prices, long-term thinking and strong cash flow.

Tax should support those decisions, not replace them.

There may be opportunities as well

Interestingly, major tax reforms often create opportunities.

When some investors hesitate, others step forward. If fewer buyers compete for certain assets, prices may become more attractive. If more investors chase income-producing assets, growth assets may become relatively cheaper.

Markets rarely stand still; they adjust.

That's why I always caution against making investment decisions based solely on headlines.

By the time most people react emotionally to tax announcements, the market has often moved on.

What investors should do before the CGT changes start

One practical consequence of the proposed reforms is that planning ahead becomes increasingly valuable.

Investors will need to think carefully about acquisition dates, record-keeping and, in some cases, obtaining market valuations around the commencement of the new rules to correctly distinguish gains that accrued under the existing regime from those subject to the new methodology.

These aren't particularly exciting topics but they could ultimately have a significant impact on after-tax returns.

It's another reminder that successful investing isn't simply about picking winning assets; it's also about managing them well.

We've found that the investors who tend to achieve the strongest long-term outcomes aren't necessarily those chasing the biggest tax advantage.

More often, they're the ones who plan ahead, keep good records and understand how tax fits into a broader investment strategy, rather than letting it drive every decision.

The bottom line

The proposed CGT reforms will undoubtedly change Australia's investment landscape, but I don't think they'll fundamentally change what makes a good investment.

Quality businesses will still create wealth.

Well-located property will still appreciate over the long term.

Diversified portfolios will still help manage risk.

The biggest change, in my view, won't be the amount of tax investors pay. It will be the questions they ask before investing.

Instead of chasing assets primarily because they deliver the biggest tax concession, I suspect more Australians will focus on investments that generate stronger cash flow, better diversification and sustainable long-term returns.

And that's probably not a bad shift.

Because the most successful investors I've worked with over the years never built their wealth around tax rules.

They built it around good investment decisions.

The tax outcome was simply the icing on the cake.

Are there investment strategies that can help retirees access the age pension sooner? Yes!

And it is worth talking to your financial adviser about these - even a part age pension can play an important role in a retirement income strategy.

And the good news is that you don't have to exhaust your own resources before you qualify for that 
first age pension dollar.

The thresholds for age pension eligibility increased on July 1, 2026.

A couple, who live together and own their home, can have up to $1,102,500 and still qualify for a part age pension.

For a single homeowner the limit is $733,500.

But here's the thing. A key misconception among retirees is that they must spend most of their savings to qualify for the age pension.

That's simply not the case. This is where a lifetime annuity, which pays an income guaranteed for life, can be worth investigating.

It's all about the assets test

For many Australians, account-based pensions (ABPs) are the go-to way to use super in retirement.

ABPs, however, are fully assessable under the age pension income and assets tests.

By contrast, only 60% of a lifetime annuity investment counts towards the annuitant's assets test.

After five years from the initial investment or when the annuitant later reaches 85, only 30% is assessed. Similarly, only 60% of income generated by a lifetime annuity is assessed under the annuitant's income test.

So for every $200,000 invested in a lifetime annuity, such as Generation Life's LifeIncome product, assessable assets reduce by $80,000.

Own $1 million in assets and still qualify for a part age pension 

The favourable treatment of lifetime annuities means that a homeowning couple who live together can have more than $1 million in retirement assets and still qualify for a part age pension.

Put simply, a lifetime annuity can reduce your assessable assets below the threshold separating self-funded retirees from those on a part age pension.

The benefits of a lifetime annuity can go a lot further.

Along with a regular income guaranteed for life, a lifetime annuity can bring forward the age at which you can qualify for the age pension depending on your other retirement assets.

With a regular income stream from a lifetime annuity, ABP and age pension, retirees can gain greater confidence and flexibility in managing their retirement income.

Talk to your financial adviser about how a lifetime annuity can help you access the age pension sooner than you expected.

What to read next

• Retirement income - avoiding 'regret risk'
• The hidden money strain for women carers
• Smart EOFY tax moves investors can still make
• How to embrace the start of the financial year

Reader question

Hi Paul, under the new CGT rules, will my future net capital gain from the sale of ETFs be taxed at 30%, regardless of the tax-free threshold?

Is it better to sell now and add the money into my superannuation as a non-concessional contribution instead?

I am 45 and planning to sell the investment at 60 when I retire. - Giovanni

Paul's response

Interesting question, Giovanni.

Yes, if you sell your ETFs in years to come, you will pay the old, 50% discount CGT on gains up to July 1, 2027 and the new CGT on gains after this date.

Does super look very advantaged? Yes, it does.

What you need to do is to talk to your super fund or adviser.

The correct answer for you depends upon your income, amount currently in super, your need to access funds and personal situation.

But as I mentioned to Fran, for the vast majority of people, super is, what else can I say... super.

It is very attractive if you don't need the money until retirement.

At this time in life, where else can you keep up to $2 million, paying no tax on earnings, able to draw both your pension and any lump sums you need tax free?

Start by chatting to your super fund.

But neither of us needs to be Albert Einstein to figure out that with salary sacrifice only being taxed at 15% from our pre-tax salary and concessional payments we make with our own money only paying 15% tax on income and 15% on capital gains, until we go to pension phase, where no tax is payable up to $2 million in super, I know where I want my money!

A stock tip from a celebrity finance expert could be the first sign you're being targeted by scammers.

Australia's securities and investments regulator is urging budding investors to beware of 'pump and dump' scams after seeing a spike in criminals using fake celebrity endorsements to draw people into these ruinous schemes.

What are pump and dump scams?

A pump and dump refers to when someone with a financial interest in a small company or asset spreads disinformation in order to encourage other people to chip in and inflate the price of their investment.

ASIC says pump and dump operators are increasingly using AI to create images and videos that make it look like well-known finance industry figures, such as high-profile investors and economists, are endorsing their investment opportunity.

The regulator's warning comes after Money finance expert Paul Clitheroe was impersonated by scammers trying to lend credibility to unreliable stock tips.

Other scam efforts have included fake endorsements from popular media personalities like David Koch and Scott Pape or successful business people, including Andrew Forrest and Elon Musk.

These fake endorsements often feature prominently in social media ads designed to lure investors into private messaging groups.

Anyone who clicks on these to register their interest will be funneled into a group chat on a messaging platform like WhatsApp and Telegram.

"It gives the appearance that it's a really thriving investment program," says Grant Williams, head of financial crime operations at banking group NGM.

"[The victims] see other people talking about how much money they've made [and] don't want to miss out, so they start putting money into these investments."

Once those drawn into the opportunity have bought a large amount of the asset and it's price has been sufficiently "pumped," the operators behind the scheme will "dump" (sell) their share for a profit.

"Because they are selling those assets in a large chunk, the price of the asset will collapse. So later investors will be left with substantial losses," says Professor Angel Zhong from the School of Economics, Finance and Marketing at RMIT.

Sticky assets leading to million-dollar losses

ASIC says victims can be left holding shares worth a fraction of what they paid.

To make matters worse, the obscure nature of the assets at the centre of pump and dump scams can make selling them even at their depleted value a difficult task.

"[The assets are] normally very small or illiquid, small cap or micro cap stocks," says Marc Jocum, senior investment strategist at Global X, a company providing ETFs to investing platforms.

"Some of these smaller companies don't have as much market depth or trading volume in them, so let's say you wanted to sell at a particular price, but there's no buyer on the other end."

In a sign of how quickly the tables can turn on budding investors chasing a hot tip, ASIC says it's seen prices of shares pumped as high as US$11, before quickly falling to $1.

Such situations lead to what the regulator saw earlier this month, when more than $2.75 million was lost by only 16 Aussie investors sucked into pump and dump operations.

What makes pump and dumps so appealing?

ASIC Commissioner Alan Kirkland says the fact that participants are being directed to buy real shares through legitimate trading platforms is central to what makes pump and dump schemes powerful.

"Many victims don't realise they're being scammed because they genuinely own the shares they've purchased," he explains.

"[But] just because you can see shares in your trading account doesn't mean the investment recommendation was legitimate."

The capacity of online communities to supercharge the spread of disinformation is also pushing these scams to new heights, adds Professor Zhong.

"In the past, promoters may have relied on newsletters or email campaigns... social media and group chats make the problem worse," she says.

"Scammers can reach thousands of investors very easily and this online community creates the impression of independent and professional opinions."

Why retirees are being targeted

Bankers and regulators say pump and dump scammers are aiming their online outreach to people in particular life stages where they might have built-up funds.

"We suspect scammers are deliberately targeting Australians nearing retirement because they know many people in this age group have accumulated savings and are looking for investment opportunities," says Kirkland.

What can be done

Marc Jocum from Global X ETFs admits the investing industry has a role to play to protect Australians from pump and dump scams.

"Investor education needs to come first and foremost, both from providers like Global X and big investment houses, but also from social media platforms," he says.

Several banks and experts sounding the alarm on pump and dumps have also called out social media platforms and their algorithms for helping scammers reach their target audience.

Experts like Professor Zhong say these services could highlight more clearly when content is AI generated, in order to highlight high-profile endorsement that could be fake.

She says trading platforms could also issue warnings and watch out for abnormal trading volumes.

Facebook, Instagram and WhatsApp owner Meta have been contacted for comment.

Every week, more than 1.5 million listeners tune in to the Kyle & Jackie O commercial breakfast radio show on KIIS FM, to hear a variety of chat, music and, of course, the all-important, revenue-building advertising.

The listeners hear the duo joke about - and graphically describe - a range of crude and, at times, harmful topics.

Among these listeners is a group who call themselves Mad F***** Witches (MFW).

What is Mad F***** Witches and what was the #VileKyle campaign?

This group is not listening for enjoyment, they are taking note of sexist, misogynist, racist and homophobic content. Most, importantly they are noting companies that advertise on the show.

The activist group's followers then email these companies to bring their attention to the objectionable content and lobby them to stop spending their advertising budget on the show.

MFW calls it the #VileKyle campaign. It's an example of a new type of group that is forgoing boycotts to trigger change; instead they employ the power of finance.

The idea being that if enough advertisers pull their spots from the Kyle & Jackie O show, it will reduce network owner ARN Media's radio advertising revenue to the point where they are left with no choice but to take 54-year-old Kyle Sandilands off air.

"Kyle is degrading to women and people in minority groups; he speaks in a degrading, bullying manner to pretty much anyone who's not a straight white male," says Jennie Hill, the founder of MFW.

"I don't have any idea whether he's a physically violent man, and would obviously never accuse him of that, but what he does is verbally violent and it validates the violence that men who are prone to physical violence will commit."

Why advertisers targeted Kyle & Jackie O

There are numerous examples of the sort of content MFW objects to. While chatting to Jackie 'O' Henderson, Sandilands makes regular references to sexual violence towards women, incest, fat-shaming, homophobic slurs and more.

Money is reproducing one example here so readers can understand the context of the #VileKyle campaign: reacting to criticism about his since-cancelled TV show from journalist Alison Stephenson, Sandilands called her "a fat slag", commented on the size of her breasts and threatened to hunt her down.

Some of the content is simply puerile: Sandilands talks about eating a Magnum ice-cream while on the toilet and "holding it in" (this content is promoted on the KIIS YouTube channel).

Hill says MFW doesn't object to puerile content in general, it's the harmful content it is targeting. It's worth nothing that more than 200,000 children and teenagers listen to the show in Sydney alone.

The uncomfortable truth is, however, that it is Sandilands' and Henderson's crudeness that attracts listeners. And that large number of listeners in turn attracts advertisers.

"Kyle and Jackie O have been like they've been for well over a decade and they've been wildly successful. They haven't needed to change," says Chris Walton, managing director of Nunn Media, which buys advertising space on behalf of companies.

Any change to the content or the line-up will be driven by commercial imperatives, not a lobbying campaign, he says. If the MFW campaign ever got to the point that it began to impact commercials, then it would be taken into consideration.

Kyle & Jackie O's Melbourne expansion and ratings battle

Last year the show started broadcasting on KISS 101.1 in Melbourne, in what was to be the first step in a push to syndicate the show around the country.

Ratings were disappointing, which commentators said was because the sort of crude content that attracts Sydney audiences turned off the more refined Melburnians.

But the latest radio ratings survey suggested that the show might have turned the corner in the southern capital, with ratings starting to improve, dashing hopes among detractors that the pair would have to retreat from Melbourne or tone down their content.

In fact, ARN is making a virtue of the crude content and in May launched an advertising blitz for the hosts in Melbourne with the theme 'Radio Gone Rogue!'.

How much advertising revenue is at stake for ARN Media

At stake are many hundreds of millions in advertising revenue.

ARN Media earned more than $300 million from radio advertising in 2024, and would earn significantly more should the national syndication plan succeed.

Much of this comes down to Sandilands and Henderson, and their pay reflects it. They are on a 10-year contract said to be worth $200 million.

At the same time, ARN Media is implementing what it calls a businesses transformation program to reduce its costs by $40 million a year.

The cost cutting has done little to help ARN Media's share price, which has slid from $2.20 at the end of 2021 to 51 cents at the end of May this year.

How many advertisers left Kyle & Jackie O?

Hill points to the cost-cutting program in her estimate that MFW has cost ARN Media $30 million to $40 million in lost advertising revenue.

MFW publishes a list with the names of several hundred businesses that it says no longer advertise on the Kyle & Jackie O show.

However, Hill acknowledges that the list may contain errors and that companies might have stopped advertising on the show for reasons other than the MFW campaign.

This is MFW's claimed list of new and returning advertisers, released recently:

 

 

 

 

View this post on Instagram

 

 

 

 

 

 

 

 

 

 

 

A post shared by MFW (@mfwitches)

What major brands said about advertising on the show

Most of Australia's big businesses don't want their name associated with MFW in any way.

Of more than a dozen enquiries sent to major corporates, only a couple supplied an 'on the record' comment - that is, a statement they are happy to put their name to.

Among the major banks, only NAB responded, saying: "The placement of our advertising campaigns is dynamic and constantly changing as we seek to meet our customers' needs. We continually work with our agency and media buying partners to ensure the integrity of our brand and to position our advertising where are customers consume their media."

It did not dispute MFW's claim that it doesn't advertise on the Kyle & Jackie O show.

Westpac, Commonwealth Bank and ANZ didn't respond.

However, in an email to an MFW supporter who had asked the bank to reconsider its advertising expenditure given its 'inappropriate content', ANZ wrote that the Kyle & Jackie O show is on its brand exclusion list.

The bank explained that some of its 'bonus' slots - where the radio network plays their ads for free - weren't filtered to ensure that they didn't appear on the show. ANZ said it had contacted ARN about the issue.

It's not just the big banks that don't want to comment on MFW.

Qantas and Virgin didn't respond to enquiries, nor did Optus.

Telstra supplied a statement: "We stopped advertising on the program in August 2024 as the content didn't align with our brand."

Woolworths and Coles also didn't respond, although Coles has emailed an MFW supporter to say it will not advertise during the Kyle & Jackie O show.

Has the campaign actually hurt ARN Media?

Steve Allen is a media analyst at Pearman, a media agency that buys advertising space on behalf of companies.

The suggestion that MFW has cost ARN up to $40 million is fanciful, he says, and questions whether they have cost ARN any revenue at all.

There is, Allen says, no doubt that some companies are concerned when contacted by MFW. They then tell ARN they don't want their advertisements to appear when Sandilands is on air or ask their media agency to tell ARN.

But the advertising spots taken out of the breakfast timeslot are usually placed elsewhere in the KIIS FM or other stations' schedules.

"When they get the call from us, the last thing they're going to do is let go of dollars," Allen says of ARN Media.

"They're sympathetic to the plight that advertisers find themselves in and the simplest and easiest commercial way is to reschedule."

And while MFW's campaign is generating headlines and making advertisers take note, Allen also doubts that it will result in the pair toning down their content because, ultimately, it's the ratings that count.

MFW's Hill argues, however, that if organisations are taking their advertisements out of the four-hour prime time KIIS breakfast spot, there is only so much other prime-time broadcasting they can go into instead, and that many organisations have pulled their advertisements from the network altogether.

ARN Media did not provide an executive to interview and instead responded in writing to questions.

The company didn't directly address questions on the effect the #VileKyle campaign has had on its revenue, instead saying it has a strong and stable advertiser base, "with partners continuing to achieve great results across our platforms".

The broadcaster acknowledged that the Kyle & Jackie O show "may not be for everyone", but said its enduring success lies in its ability to resonate with a large portion of everyday Australia.

"Radio is subject to robust regulations. The same can't be said for social media, and some of the personal attacks and radical views held within these activism groups are deeply concerning," ARN Media said.

On activist groups in general, the broadcaster said they "pick fights" with radio personalities to increase their own relevance.

"These groups are prone to overstating their impact, and they don't dictate our strategy or programming. We are focused on the millions of loyal fans who enjoy our content and the advertisers that get quality results," ARN said.

Who is Jennie Hill, founder of Mad F*** Witches?**

MFW came about in 2016, after then Minister for Immigration and Border Protection Peter Dutton referred to political journalist Samantha Maiden as a 'mad f#$$!!$ witch' in a text message and mistakenly sent the message to Maiden herself.

The name resonated with Hill and she started what she describes as a "silly little Facebook page". It now has 90,000 followers on Facebook and tens of thousands on other social media sites.

Some followers contribute $5 to $10 per month to MFW's $120,000 revenue, which it uses to pay five part-time workers around $25,000 each, including Hill, who refers to herself as an accidental activist.

She says she is embarrassed by the swearing in her group's name and still cringes when she hears it, but says it also carries an important message because it has not traditionally been acceptable for women to swear, and that by swearing without apology women are taking back their power.

Three years after she formed MFW, she heard an interview with then Prime Minister Scott Morrison, during which bombastic Sydney radio host Alan Jones said Morrison should "shove a sock down [New Zealand Prime Minister Jacinda Ardern's] throat". He followed it by saying the PM should give her "a few backhanders".

"[MFW] didn't really want to start a campaign, but the pressure from our followers was intense," says Hill.

"I was working in a successful career at that time, had run my own business for 30 years, so I wasn't looking for anything like that."

Inspired by campaigns overseas, Hill and her supporters drew up a roster to listen to the Alan Jones Breakfast Show and make a note of the advertisers. The supporters then emailed the advertisers to say they were unhappy with the content, urging them to pull their ads.

In May 2020, Jones announced his retirement from his role at 2GB and the following year Sky News Australia announced it would not be renewing Jones' contract.

MFW was widely credited for ending Jones' media career.

Hill made herself available to Money for two interviews to answer any questions, including claims from companies whose advertising MFW targets (who asked that their names not be used).

These included claims that MFW is an extremist group.

"We're only extremists because we're women," she says, adding that pro-nuclear, tax cuts and policies seeking to control women's bodies are more extreme.

MFW has been accused of bullying individuals, such as receptionists or customer service people who work for the advertisers.

However, sending them examples of the offensive content is an important part of MFW's campaign strategy.

Hill says MFW is sorry for upsetting these people, but considers it hypocritical that MFW is being criticised when these companies are supporting offensive content.

Commenting on the #VileKyle campaign, she says: "What I work for now is just trying to make the world a bit better for other women," she says.

Reader question

Hello Paul, what do changes to the capital gains tax (CGT) discount mean for ASX share portfolios outside of super?

I have shares that I purchased 30 years ago, set to a dividend reinvestment plan (DRP).

The others I purchased within the past two years directly. I also invested in some ETFs.

The plan was to dollar-cost average every month, then sell down when needed in retirement in 10-15 years.

Am I better off redirecting this money into super instead? I'm in the 37% tax bracket. - Fran

Paul's response

I can only give you general information, Fran, but nothing changes for you until July 1, 2027.

On that date, you will need to establish the value of your shares and ETFs, then future gains above inflation become taxable under the new rules.

More broadly, unless you are a very organised person, I find dividend reinvestment, while it makes technical sense, a real pain when it comes to CGT before or after July 1, 2027.

Either way, each reinvestment is a new CGT issue and it drives me nuts trying to record each reinvestment under the rules before the effective date, let alone doing inflation-adjusted calculations on each reinvestment after the date.

I do appreciate that tax will keep changing, but the two most favoured assets would have to be our home and our super.

Sure, super is being taxed more at higher amounts, but for the vast majority of people, paying no tax on your super earnings on amounts up to $2 million, if you are in pension phase, is super generous (pun intended).

If you are in accumulation phase, it is 15% tax on income and 10% on capital gains inside your fund.

You could add money through salary sacrifice and only pay 15% tax on these contributions.

I'd chat to your fund, Fran, but without knowing your personal objectives or exact timeframe, if I was in your shoes and building money for retirement, growing my super would be my number one preference.

What to read next

• Budget 2026: The changes you'll feel first
• Budget tax changes put all investors on notice
• Ask Paul: I invested in good faith, now the rules are changing
• How younger Aussies could beat higher capital gains tax
• Start-ups, small businesses win CGT reform carveouts

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Margin loans allow investors to borrow funds secured by a portfolio of listed securities and/or managed funds.

The loan money can then be used to buy additional investments while preserving personal cash reserves.

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Understanding the risks and benefits

On one hand, margin loans can be tax-friendly, with the potential to claim a tax deduction on loan interest as well as offering opportunities to prepay loan interest in advance.

However, if your portfolio falls in value below the margin lender's minimum benchmark, you may be asked to chip in funds to reduce the loan balance or provide additional security.

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Award-winning lending solutions

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Reader question

Hi Paul, I'd like to better understand the changes to CGT in the budget, specifically around shares and digital assets such as crypto.

I'm a long-term investor and my understanding is that after July 1, 2027, future capital gains will be subject to CGT indexation.

Does this mean that up to this date, capital gains will be calculated under the current CGT rules, then a separate calculation of indexation would be required from July 2027 (investments before this date are only partially grandfathered)?

While I support changes to negative gearing and CGT on housing, if that were the case as stated above, I find it disappointing that these other types of assets are not fully grandfathered too.

I have invested in good faith based on the current rules to invest in my future.

I think it would be helpful to explain the proposed changes as per my queries, with some calculations, as I'm sure it will be of interest to many readers. - Peter

Paul's response

There is rarely a dull moment in the world of money, Peter. There is always change, but right now it is a torrent!

The geopolitical uncertainty of the Middle East is rattling markets, AI tech companies are flying, local interest rates are up, day-to-day life costs have exploded and then we add the proposed tax changes.

I'm with you on negative gearing. I much prefer what most other countries do, which is to give tax breaks on the family home, but no negative gearing on investment properties.

The most valuable change, in my opinion, would be an increase in GST, but politically that is a disaster. It is a shame, but we'd need bipartisan political support to increase GST.

This is a progressive tax. Those who spend more, pay more. Compensating lower income earners, pensioners and so on is not terribly complex and we could get rid of a whole bunch of silly taxes, such as payroll tax.

Maybe our state governments could then also stop their unhealthy reliance on pokies tax. But I don't see higher GST happening and, like you, I am okay with the proposed changes on negative gearing on existing property.

With shares, crypto and other non-property assets, you are correct.

If the legislation goes through, then we'll all be valuing our assets on July 1, 2027, and that becomes our base number for the old CGT rules with the 50% discount.

From that July 1, 2027 base number, if we sell, the gain will be added to our taxable income, less inflation. But importantly, tax will be a minimum of 30% on our profits over inflation.

Interestingly, if we sell assets after July 1, 2027, we can also use the 'time apportionment' rule, where we can split the gain proportionally based on the number of years the asset was held under the old tax system and the new.

A bit of a sneaky one for us older investors is that any assets we held before September 20, 1985, which were exempt from CGT, will now lose that exemption on gains above inflation from July 1, 2027.

If you or any Money readers would like to model the impact of these changes, there are already calculators online, such as Stockspot's CGT change calculator.

What to read next

• Budget 2026: The changes you'll feel first
• Budget tax changes put all investors on notice
• Australian financial glossary: 140+ money terms explained
• How younger Aussies could beat higher capital gains tax
• Start-ups, small businesses win CGT reform carveouts

Reader question

Hi Paul,

I put $25,000 into ETFs and quickly lost up to $2000. Did I panic too soon or make a big mistake?

I am 44 years old, own my own unit outright with a market value of about $800,000. I have no dependants and no debts.

I work four days a week, have pre-tax salary of $95,000 per year and $220,000 in super.

I salary sacrifice an additional $400 fortnightly and have $140,000 in high-interest savings accounts.

I hope to continue low-risk investment strategies to build my savings for a comfortable, not extravagant, and early if possible, retirement. Low confidence has stopped me investing in the sharemarket.

I have attended a number of ETF seminars, and, in September 2025, built the courage to invest $25,000 in ETFs using the online trading platform Moomoo.

I have invested 80%-90% in what I understand are two well-known large cap ETFs and 5% in two small cap ETFs for diversification.

I am hopeful of average returns over the next 20 years, understanding there will be ups and downs.

But what little confidence I had when first investing has quickly evaporated as my portfolio is $1500-$2000 down on my initial investment.

What am I doing wrong? Am I over-reacting? Should I continue investing as per my current plan? I would appreciate your advice. - Tania

Paul's response

First up, Tania, congratulations on buying and paying off your unit. That has been a critical decision and sets you up for life. Once paid off, as you know, you can top up super and build savings.

I get your point about shares.

Most of the problem is that we can see their value daily. If our properties were listed, we'd have a minor heart attack seeing our homes bounce up and down in value every day.

It is something I like about property. We don't really know the value of our homes month to month or even year to year. We just look back after a decade or so and, in most cases, say, 'wow, that was a good idea'.

Your super will hold substantial exposure to shares, but I doubt any of us look at the unit price of our super too often; mostly it is a once-a-year look when our annual statement turns up.

Our super also disguises times of poor share or property performance. You are having compulsory contributions going in, plus your $5200 a year top-ups, so almost every year, good or bad, our account value goes up.

With your ETFs you are doing nothing wrong. You've bought two well-diversified funds and added some smaller cap ETFs, giving you exposure to smaller companies.

This makes sense.

I'm sure you have seen many long-term sharemarket graphs. You have told me you are nervous about shares, but remember you will own a far greater dollar value in shares in super than you hold in ETFs.

I suggest you do with your ETFs exactly what you do with your unit and with your super.

Relax and let a key rule of money work for you. It is not market timing that matters, it is time in the market.

What to read next

• The tax traps when you invest in shares, ETFs and crypto
• Build a set-and-forget ETF portfolio in 2026
• How to choose investments that fit your life
• Five things Aussies should check before investing in an ETF
• The pros and cons of micro-investing

Chances are, you've heard about 'private credit'.

That's not surprising. Globally, the private credit market is worth $US3.5 trillion ($4.87 trillion). The Australian market is valued at around $200 billion and growing fast.

And we all know what a mortgage is: A loan secured against real estate, provided either by a bank or a non-bank lender.

And that brings us to real estate private credit.  It's increasingly familiar to most Australians.  But what is it, and how can you get involved? Let's take a look.

What is real estate private credit?

Just like any home loan, the underlying property acts as collateral against the loan.

In real estate private credit, your money is pooled with other investors and then used by the lender to provide mortgages to eligible borrowers.  And those loans are secured by a mortgage over real estate.

In much the same way that banks make money on home loans, investors in mortgage credit can expect to receive regular income earned from the interest charged on the loans.

This can make mortgage credit especially attractive to those looking for dependable income such as retirees. But it can also play a role for investors who simply want above-inflation returns, regular cash flow, low capital volatility, and a chance to add extra diversity to their portfolio.

Why has mortgage credit become so popular?

Real estate private credit has existed in various forms for decades. La Trobe Financial, for example, has been giving investors opportunities to diversify into mortgage credit for more than 70 years.

However, the market has seen substantial growth in the last decade.

In any competitive environment, competition serves to meet the needs of a wide range of borrowers.  Quality borrowers whose employment is contract-based, other self-employed borrowers, people looking to borrow via their SMSF, and even people undertaking smaller construction projects, can all benefit from a competitive non-bank sector.

It benefits investors, too.

Aussie investors have been long-term supporters of mortgage credit.

It's not just about the regular, attractive returns and lower volatility. Mortgage credit is an investment backed by property - an asset that Australians understand deeply and feel comfortable with.

How has real estate private credit performed?

As with all investments, the returns you can expect to earn will depend on the quality of the underlying assets and the expertise and experience of the manager.

For more than two decades, La Trobe Financial's 12 Month Investment Account has delivered consistent outcomes: 100% return of capital, and all income paid at the advertised rate.*

Manager selection matters

The rising popularity of private credit has driven an increase in the number of providers that investors can select from.

It pays to choose carefully.

Not all private credit funds are the same. They have different underlying assets, different approaches to lending and borrower assessment, and importantly, varying degrees of transparency.

At La Trobe Financial, our lengthy track record has been built on a conservative approach to lending, a commitment to providing stability for our investors across all economic cycles, and a philosophy of openness and transparency.

All Australians - whether they are a current investor or not - can visit the La Trobe Financial website and look at our monthly portfolio reports detailing how investor funds are being put to work.

The bottom line

Investing across Real Estate Private Credit can deliver reliable income, above-inflation returns, and low volatility.

Partner with a manager such as La Trobe Financial, with a proven record for disciplined, long-term investing, and mortgage credit can be a useful tool to build a resilient portfolio that is responsive to changes in inflation.

Disclaimers: *Past Performance is not a reliable indicator of future performance.

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Credit Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important that you consider the Product Disclosure Statement (PDS) when deciding whether to invest or continue to invest in the fund. The PDS and Target Market Determination is available on our website. To find out more about La Trobe Financial, contact the Investor Centre on 1800 818 818 or visit latrobefinancial.com.au.

Any advice is general and does not consider your personal circumstances.

For everyday investors, that can make it even more difficult than usual to know how to respond and position their portfolios.

As always, information can be key. So, with that in mind, what are the potential risks and opportunities awaiting investors in the remaining seven months of 2026?

Here are perspectives of 11 investment experts on everything from shares and bonds to commercial real estate.

Darren Connolly - Chief executive at InvestmentMarkets

"Most investors think they're diversified, but true diversification means more than holding a few different stocks.

"It means exposure across asset classes, geographies and income sources - and it means having parts of your portfolio where the cash flows aren't driven by market sentiment at all.

"That's the gap we see most often, and it's the one that hurts most in periods like this."

Michael McCarthy - Chief executive at Moomoo Australia

"I'm seeing signals from bond markets, currency markets, cryptocurrency markets and share markets that are all lining up with the same message - growth is slowing and interest rates are headed higher.

"The best time to prepare for volatility is at the beginning when you devise your strategy. The next best time is when markets are going well.

"The third best time is now, because it's never too late to act."

Rudi Filapek-Vandyck - Founder of FNArena

"The share market outside of a very small selection of winners is now basically becoming a value proposition for investors who can look beyond the immediate headwinds.

"The whole AI narrative is a very long-term story. It's going to change the world, have no doubt but the way it does is open for debate."

Simon Raubenheimer - Director of Contrarius Investment Management

"It is tempting to get excited about shares that are down 70 to 80% in a short space of time, but there's a serious risk of buying a value trap.

"Our challenge is to be extremely disciplined in avoiding companies that face existential risks, even if they look cheap in the rearview mirror."

Marc Jocum - Product and investment strategist at Global X ETFs

"The current dividend yield on the Australian share market is around 3.2%, the lowest it's been for decades.

"We are heavily weighted into financials and materials, which make up 50 to 60% of the market, and significantly underexposed to the sectors projected to grow earnings at double digits.

"Don't forget that earnings drive the majority of share market returns."

Michael Saba - Portfolio manager at Arculus Funds Management

"The landscape has changed dramatically. Hybrids are being phased out, but that doesn't mean they're dead, there are still 38 issues and around $37 billion outstanding.

"What's exciting is the range of new yield products emerging. It's a sector that has just reached adolescence - it's going through growing pains, and that's good, because it will sort itself out."

Nick Alcock - Australian Secure Capital Fund

"Since October 2021, APRA has maintained a 3% mortgage serviceability buffer. The unintended consequence is that we now see situations where hopeful refinancers can't even service with their current lenders.

"Borrowers still need funding and projects still need finance, but the traditional banking system is no longer willing to provide it in some cases and that's the gap private lenders have stepped in to fill."

Vaughan Hayne - Managing director and co-founder at Exceed Capital

"We've seen rents on the Gold Coast increase 40% in two years, with A-grade office vacancy under 1.7%, the lowest it's ever been.

"Some of our A-grade buildings have moved from $460 to $650 per square metre.

"Construction costs and labour costs are at record highs, which means less new supply - which is generally a good thing for existing commercial property owners. Less supply, more demand, pushes up rental prices."

Michael Fazzini - Sales and distribution executive at Capital Prudential

"The biggest insight in property development that most investors don't realise is that most of the profit comes from what you pay for the land.

"Market price for land in our world isn't the last transaction of a similar site or per square metre, it's working backwards from what the finished product is worth, the build costs, and the minimum return needed to make the project viable.

"Get that wrong and no amount of execution can save you."

Marcus Cleary - Head of distribution at Oreana

"Volatility is a pricing problem, not a cash flow problem.

"Whether it's tariffs, tech selloffs or oil shocks, the price volatility and breadth of that volatility isn't seen within the direct asset class because the cash flows we deliver are linked to CPI and backed by long-term leases.

"Regardless of the economic environment, families are still sending their kids to childcare."

Richard Collier - Chief financial officer at Heartland Bank

"Australians aged over 60 hold more than $3 trillion in property, yet less than 1% of that available equity has been unlocked.

"The total reverse mortgage market is only around $5.5 billion against an addressable market of around $600 billion.

"With superannuation balances of just over $4 trillion across the entire system not sufficient to fund the lifestyle Australians expect in retirement, this is the largest store of value that remains untapped."

But it might also help them discover ways to avoid paying the proposed higher capital gains tax.

Property already feels out of reach for many people under 40, which has pushed an entire generation toward shares, ETFs and crypto.

But now, with the proposed changes to capital gains tax and negative gearing, even long-term investing is becoming less attractive.

This is why it's no longer just about choosing the right investment.

The structure you invest through could become just as important as the investment itself.

There's one loophole sitting quietly inside the tax system that many Australians probably haven't thought about. Most people assume you only have two choices: buy assets and hold them, or don't invest at all.

But the tax office treats investors and traders very differently, and if CGT concessions become less attractive, that distinction suddenly matters a lot more.

If you're classified as an investor, profits are generally taxed under capital gains tax rules.

But if you operate as a genuine trading business, profits are typically treated as income.

That might sound like a technical detail, but it completely changes the game. More Australians may now start asking a question they never thought they would: "Should I stop acting like an investor and start operating like a business?"

To qualify, you generally need to show you're operating in a business-like manner with things like trading plans, records, active involvement and consistency.

A genuine trading business may also be able to claim legitimate operating expenses directly tied to generating income, including brokerage, software, internet, market data, accounting and education costs.

Superannuation could also become far more attractive.

Most younger Australians ignore super because retirement feels decades away, but if personal CGT concessions become less generous while super keeps its current tax treatment, it could become one of the most tax-effective investment vehicles available.

The old Australian model of "buy a house and wait" is fading fast. Governments can change tax rules overnight, which means younger Australians will need to become smarter and more strategic about how they build wealth.

That's because in the future, building wealth may have less to do with simply owning assets and more to do with understanding the rules of the game before everyone else does.

What are the best and worst-performing sectors this week?

The best-performing sectors include Consumer Staples, up more than 2%, followed by Energy and Financials, both up more than 1%.

The worst-performing sectors include Industrials, Utilities and Materials, all down more than 2%.

The best-performing stocks in the ASX top 100 include Computershare Ltd, up more than 8%, followed by ALS Limited, up more than 7% and Mineral Resources, up more than 6%.

The worst-performing stocks include Brambles Ltd, down more than 23%, followed by Eagers Automotive Limited and Greatland Resources, both down more than 8%.

What's next for the Australian stock market?

The All Ordinaries Index has been a battle between buyers and sellers so far this week. Before Thursday's session, the market was staring at a decline of almost 2%, but buyers stepped back in aggressively to help the Index recover to down less than 0.5%.

The encouraging sign is where buyers appeared. The 8700 level continues to act as a major support zone, with buyers defending that area for the third time since June last year.

That tells us institutions are still willing to step into the market when prices become attractive enough.

What's also important is the character of this pullback compared to the sharp sell-off we saw earlier this year.

Back in March, the market dropped roughly 10% in just four weeks, which was a fast and emotional decline driven by panic and uncertainty.

This current move lower has been far more controlled. The market is down around 4% over five weeks, suggesting investors are becoming cautious, but not fearful.

That distinction matters because sharp declines are often fuelled by emotion, while slower pullbacks can simply reflect profit-taking and investors reassessing the outlook after a strong run.

Right now, the market still looks more hesitant than broken.

Given that setup, I wouldn't be surprised if the market rises next week, assuming we don't see any major geopolitical escalation over the weekend.

Markets rarely move in one direction forever and after several weeks of steady declines, conditions are starting to line up for at least some form of a relief rally.

The Materials sector also continues to hold up remarkably well despite a modest pullback this week. That's important because Materials remain one of the key drivers of the Australian market.

Meanwhile, Financials, which looked weak last week, managed to stabilise and finish on a firmer footing.

If both heavyweight sectors regain momentum together, this could provide the fuel needed to push the broader market into its next rebound.

SpaceX IPO could be biggest ever

SpaceX could be about to make stock market history, and Australian investors may get a way in.

Elon Musk, CEO of SpaceX, has formally lodged paperwork with the US Securities and Exchange Commission to list his space company on the Nasdaq, setting up what could become the biggest IPO ever.

While pricing hasn't been confirmed, early expectations suggest the float could raise about $US1.75 trillion, roughly $2.5 trillion, putting it in record territory.

It's a bold move, but not without risk.

The filing shows SpaceX generated $US18.67 billion in revenue in 2025, while still posting a loss of $4.94 billion, highlighting the high-cost nature of the space race.

For investors, the opportunity may extend beyond buying shares directly. Once listed, SpaceX is likely to appear in major exchange traded funds, offering indirect exposure for Australians.

The $5000 pet bill many can't afford

A vet visit could cost thousands, and many Australians worry they won't be able to pay.

New research from Royal Canin shows 78% of pet owners are concerned about affording veterinary care, despite two in five seeing their pet as a family member.

Some say they'd stretch their finances. One in four would pay up to $5000 for treatment, while almost one in ten say there's no limit.

But the reality is different.

Nearly two-thirds of pet owners don't have insurance, and vets say cost is a major barrier. One in two reports that up to half of the recommended treatments are declined because owners simply can't afford them.

Insurance can help, but it comes at a price. Pet cover can cost more than $800 a year, and like human health insurance, policies often include waiting periods before claims are paid.

Why car parks are pushing up home prices

You could be paying tens of thousands for a car space you don't even use.

Mandatory parking requirements in new developments are pushing up apartment prices across Australia, even as many of those spaces sit empty.

Research from the Grattan Institute shows up to 40% of car spots in some buildings are vacant each night, yet buyers are still footing the bill.

The added cost is significant.

Parking requirements can inflate the price of a two-bedroom apartment by about $70,000 in Sydney, $62,000 in Melbourne, and more than $100,000 in Brisbane and Perth.

That's money many buyers don't need to spend, especially as fewer inner-city residents rely on a car.

The Grattan Institute wants governments to change the rules, allowing parking to be bought or rented separately from apartments.

For buyers, this could mean lower upfront costs and more choice. It could also free up construction resources, with Grattan estimating the savings could help deliver more than 9000 additional homes.

One in four Aussies lifting card limits to cope

More Australians are turning to credit cards to manage rising costs, but the short-term fix may come with long-term risks.

One in four cardholders have applied to increase their credit limit in the past year, according to Money.com.au, with the average boost sitting at $3,000, about 30% of a typical limit.

For some households, it's a way to stay on top of everyday expenses.

But experts warn it can be a slippery slope.

A higher limit can offer flexibility, yet it may also point to growing reliance on credit. As balances rise, they can quickly become harder to repay, increasing the risk of longer-term debt.

There are other consequences to consider, too. Requests to lift your limit can appear on your credit report, potentially raising concerns for lenders and affecting your ability to borrow in the future.

The shift comes as changes to credit card surcharges loom. With a ban set to take effect from October 1, 2026, reward programs could lose value, prompting more than one-third of Australians to think about using points for everyday essentials instead.

Millions in lost money, could some be yours?

There are billions of dollars in lost money sitting unclaimed in Australia, and some of it could be yours.

ASIC says $2.7 billion is waiting to be reunited with its owners, from forgotten bank accounts to old shareholdings and insurance payouts.

And that's just the start.

Unclaimed super adds another $19 billion, taking the total pool of lost money to a staggering level.

Interest in tracking it down is rising fast. Visits to ASIC's Moneysmart unclaimed money tool have jumped 74% over the past year, as more Australians realise they may be missing out.

Some of the funds have been sitting untouched for decades, with records dating back to the 1950s. One unclaimed amount alone is worth $1.3 million.

The good news is there's no deadline to claim.

You can search for free using ASIC's Moneysmart tool, and there's no need to pay private services to do it for you.

Broadly speaking, investors fall into one of two camps - those whose portfolios are weighted towards capital growth, and those with income as their primary goal.

Growth investors typically focus on assets such as shares with the potential for long-term capital growth, even though short-term returns can be negative.

Income investors, on the other hand, look for assets that deliver a reliable and steady flow of income through returns such as interest on fixed income investments.

In this way, income investors might be retirees looking to replicate their old pay cheque, with regular income at set intervals throughout the year.  But the game changes in inflationary environments, and investors need to be ready.

It's about finding the right blend

For both types of investors - income- and growth-focused, it makes sense to have a diversified portfolio.

So, it's not a question of investing only in one type of asset, but more a case of finding the blend that meets your needs.

Income investing, with its emphasis on stability and predictability, is particularly attractive to retirees, and those who rely on investments for money to live on.

However, income investments can play an important role in a diversified portfolio because they tend to be less volatile and provide more immediate financial benefits than growth assets.

Income investing can be lower risk

Income investing has another point of appeal.

Investments that generate regular, predictable income can be less risky than growth assets, and if you're not specifically seeking income, you may be able to reinvest the income for a compounding rate of return.  That's a double benefit - as it can be lower risk, while providing a real rate of return by outpacing inflation.

This can especially be the case for private credit funds managed by mature, financially stable asset managers that combine scale with a proven track record across economic cycles^*.

This scale and experience matters.

The sector's regulator, ASIC, notes that Australia's private credit market has "grown in recent years and continues to grow strongly."

The size of Australia's private credit market is currently estimated at around $200 billion.

This growth has attracted new, less experienced entrants to the private credit market.

That makes it essential for investors to look under the hood of any private credit investment to understand who is behind the fund, how long they have been in business, and their breadth of experience.

La Trobe Financial has been a leader in Australian credit for over 70 years, having navigated the full spectrum of economic conditions. And it shows.  The flagship 12 Month Investment Account has been recognised as Australia's "Best Credit Fund - Mortgages" by Money magazine for 17 consecutive years.

Inflation could drive more Australians to income investing

During periods of economic change, investors have tended to focus on income they can depend on.

Right now, inflation remains persistently high in Australia and globally. Geopolitical events are rattling share markets, and the Reserve Bank of Australia (RBA) has delivered rate hikes in quick succession.

Under these conditions, income investing can be very attractive for all investors by generating real returns which exceed the rate of inflation, with lower risk profiles.

Fortunately for investors, La Trobe Financial's popular 12 Month Investment Account is backed by variable rate mortgages. As market rates move higher, the income generated can be inflation-responsive.

This gives La Trobe Financial's investors income and  a  variable regular cash flow, while helping to maintain purchasing power.

The bottom line - it pays to invest in experience

Ultimately, the allocation between income-focused and growth-focused investing depends on your financial goals, time horizon, and risk tolerance.

Nonetheless, in today's environment where inflation has re-emerged as a key risk, certainty of income is particularly attractive.

Private credit funds and the La Trobe Financial 12 Month Investment Account can provide a positive contribution to a diversified portfolio.

Just be sure to check the track record of any private credit fund you're thinking of investing in. In uncertain times, it pays to invest in experience.

If you're seeking a durable income solution, contact the La Trobe Financial team on 1800 818 818 or visit latrobefinancial.com.au and find out more.

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important that you consider the Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in any of the funds. The PDSs and Target Market Determinations are available on La Trobe Financial's website.

*Past Performance is not a reliable indicator of future performance

Any Financial product advice is general only and has been prepared without considering your objectives, financial situation or needs. You should, before investing or continuing to invest in the La Trobe Australian Credit Fund, consider the appropriateness of the advice having regard to your objectives, financial situation or needs and consider the PDS for the fund.

When considering whether to invest or continue investing in the La Trobe Australian Credit Fund, you should be aware that (1) an investment in the fund is not a term deposit, and your investment is not covered by the Australian Government's deposit guarantee scheme. Investing in the fund has a higher level of risk compared to investing in a term deposit issued by a bank and (2) there are other risks associated with an investment in the fund. The key risks of investing in the fund are explained in section 9 of the PDS, available on our website.

Reader question

I'm a single, 62-year-old renter in Melbourne living in a share house to keep my rent low.

I receive a carer's pension, as I'm caring for my daughter.

I have $900,000 in super (some from inheritance).

If I keep renting, I will have too much money in super to continue receiving the pension at 67, but not enough to live on for another 30 years.

If I want to continue on a pension, I could buy a home (for example, a unit), but prices are so high it would leave me with very little super for the next 30 years.

Retirement villages seem to have very high fees. I'm not sure what my best option is.

Any suggestions? - Sherri

Paul's response

I think that a lot here depends upon your daughter and her long-term needs, Sherri.

We are in Melbourne a lot; our youngest child lives there.

I don't know where you live, but I popped in 'two-bedroom, two-bathroom apartments with parking in the inner-city region' into a search engine. I set the filter at a maximum price of $500,000.

My thinking was that I would like you to own a home but have an amount in super that at age 67 would give you maximum, or at least a part age pension. A lot of options appeared in locations close to the city.

My experience, and one I think widely shared by Money readers and pensioners more generally, is that homeownership makes life a lot more certain and much more settled.

A home is also a good investment, and doesn't impact a future pension.

The extent of care your daughter needs and your carer support is fundamental to your decision.

You do have money going out in rent.

Homeownership would remove this expense. I'd encourage you to do your own research, based on your own needs and expectations, but my view is that owning a home will be a plus for you and your daughter.

It could also provide long-term security for her.

Maybe the foundation of a plan could be to own a home, while not jeopardising your carer or age pension.

You know best what your and your daughter's needs are, but I'd put homeownership into your thinking, while maintaining a reasonable super balance and allowing for future age pension options under the income and assets test.

What to read next

• Cooling prices haven't helped first home buyers
• Your step by step guide to buying your first home
• Renting? You may need twice the super to retire well
• Why one-off financial advice is so hard to get
• How to make money from your spare bedroom

Residential property will be made less lucrative for investors as part of major reforms to the Capital Gains Tax (CGT) discount and negative gearing outlined in the 2026 federal budget.

Federal Treasurer Jim Chalmers argued in his budget speech that the changes - which are among part of a wider suite of tax reforms - are necessary to address inequality in the tax system and boost home ownership rates.

"This Budget includes the most significant tax reform package in more than a quarter of a century.

"We're delivering a fairer tax system for workers, for first home buyers and future generations. This will help rebalance a system which is more generous to assets than it is to labour."

So how will the existing Capital Gains Tax discount and negative gearing settings change? When will they change? And how will existing investments be affected? Here's what we know.

Capital Gains Tax discount

What are the existing rules?

Australian residents can currently reduce their capital gains by 50% when they sell an asset if they've owned it for at least 12 months.

This is what's known as the capital gains tax discount and it applies to a whole range of assets including property, shares, cryptocurrency, collectables and more.

What's changing?

Under the proposed reforms, the existing 50% discount will be replaced by inflation-based indexation and a 30% minimum tax on net capital gains.

The shift will mean that the effective tax rate paid by investors on capital gains will vary based on the nominal return, the inflation rate over the period that the assets have been held and the investors' marginal tax rate.

Who will be affected?

The new rules will apply to all asset classes eligible for CGT. However, Australians looking to invest in new residential property will be able to choose between having the 50% discount or the new indexation and minimum tax system applied.

As for timing, the changes will only apply to gains made from July 1, 2027. The existing 50% discount will still apply to any gains made on investments before that date.

What's the argument for reform?

The government argues that the CGT discount has overcompensated investors who have put their money into detached residential housing in recent decades, compared to those who have invested in other types of housing (like units) or assets like equities.

By reducing this incentive (along with negative gearing changes) the hope is that other investments will be made more attractive and investor interest in existing housing stock will be reduced, potentially benefiting those looking to get into the property market.

Negative gearing

What are the existing rules?

If the deductible costs associated with an investment (like interest on a loan) are greater than the income the asset produces, investors can offset their losses against their taxable income. This is negative gearing.

The strategy can be applied to numerous investments, but property is by far and away the most common, with Treasury suggesting that 98% of net losses from negative gearing come from property investments alone.

What's changing?

From July 1, 2027, losses made on residential property (except new builds) will only be deductible against rental income or the capital gains made from that property. Though excess losses will be able to be carried forward and offset against property income down the track.

In short, most new property investors won't be able to deduct losses against taxable income like their wages.

Who will be affected?

The changes only apply to residential properties acquired from 7:30pm tonight (May 12), meaning that existing property owners will continue to be able to make use of negative gearing until the property is sold.

New residential builds will be largely exempt, as will properties in superannuation funds and widely-held trusts. Commercial property and other assets like shares will also be unaffected.

What's the argument for change?

Behind the government's argument for reform is the idea that - together with the 50% CGT discount - negative gearing is giving some property investors unfairly generous tax breaks.

"For almost one in three properties sold in 2022-23 which were net negatively geared throughout the course of the investment, investors paid less income tax than they would have if they had not purchased the property at all - despite also turning a nominal profit," the budget papers note.

So, by removing the benefit of negative gearing on existing residential property going forward, the government hopes to redirect investor demand toward new housing to help increase supply.

ESG isn't disappearing. It's adapting.

If you spend enough time in the responsible/ethical/sustainable investing world, you'll live through periods of strong inflows followed by moments of hesitation as investors lean in or pull back from investing in various shades of green.

During my time as a reporter and editor at FS Sustainability, I saw several of these cycles play out.

They were driven by shifts in policy, global crises like the GFC and COVID, domestic tragedies like the Black Summer bushfires of 2019-2020, alongside the maturation of the industry as it grappled with greenwashing and accountability.

ESG investing cycles are nothing new

Now in my current role as stewardship manager at U Ethical, the question I'm often asked is whether rising cost-of-living pressures and geopolitical volatility, most recently highlighted by the closure of the Strait of Hormuz, will cause investors to turn away from ESG.

As always when it comes to ethical/responsible/sustainable investing, the answer is a hearty "it depends."

According to Morningstar's Global Sustainable Fund Flows - Q4 2025 report, Australia and New Zealand sustainable funds saw inflows of US$400 million in net inflows during that quarter, noting "this continued the momentum from the third quarter's roughly US$ 330 million, bringing total net inflows for 2025 to around US$ 730 million".

ESG fund flows are shifting, not falling

However, those flows weren't evenly distributed.

Passive sustainable funds attracted US$660 million, while active strategies experienced outflows of US$260 million, with investors also showing a preference for fixed income. In other words, capital is rotating but not retreating.

Investors are recalibrating how they express their values alongside their investment objectives.

Fascinatingly, Australian consumers are connecting the dots between volatility in global oil markets, increased cost of energy and fuel and the possibility of managing this risk and are doubling down on rooftop solar backed with batteries.

Last year, the federal government introduced the Cheaper Home Batteries Program, which offers significant discounts for the upfront cost of installing small-scale solar battery systems in households.

The same dynamic is playing out across markets: money is moving, not leaving.

Households are already shifting their behaviour

The program proved so popular that in less than one year, Australia's residential battery capacity doubled and more than a quarter of a million units were installed across the country, according to the ABC.

This is a tangible example of values and economics aligning: investing in renewable infrastructure is not just an environmental decision, but a financial one.

Meanwhile, 2026 is the first full year where large entities like the big end of the ASX and financial institutions will report against mandatory climate-related financial accounting standards, meaning that taking climate into account when assessing risks and opportunities is no longer a nice to have, but the baseline.

ESG investing now extends beyond climate

Of course, the energy transition is only one dimension of ESG. Investors continue to engage across the full spectrum of environmental, social and governance issues.

At U Ethical, our philosophy remains unchanged.

We assess ESG factors as both risks and opportunities, focusing on those that are financially material to each company, and prioritising engagement where we can have the greatest impact consistent with our broader ethical framework.

Importantly, conversations with investors, advisers and researchers suggest that values-led considerations remain front of mind.

We are regularly asked about the implications of AI for valuations and inequality as well as impacts on hiring and the future workforce, biodiversity and nature-related risks, and modern slavery within global supply chains.

Demand for ESG is evolving, not disappearing

So while financial returns remain paramount-as they should be-demand for responsible and ethical investing has not disappeared. It has evolved.

Or, to borrow from Talking Heads: "the same as it ever was, the same as it ever was."

Reader question

Hi Paul,

What is the best option to invest for our children's education?

In the past my folks had a specific education saving or investment set up for me and my brother.

This does not appear to be an option with the major providers that I can find.

So far we have looked at ETFs, bonds set up in each child's name so we can claim the tax benefits, and simply setting up an offset account on our mortgage, which saves us in interest but doesn't have a growth option like investing.

Are there better managed options we can investigate?

We are looking to start with $20,000, $10,000 per child, plus monthly contributions.

We are not anticipating redrawing for a minimum of five years when the eldest starts high school.

PS. Our financial adviser was not much help for this one.

Paul's response

Hmm, I'm not impressed with your adviser, Haydn.

Investing for children may not make an adviser much in the way of fees, but it is a wonderful conversation.

We're talking about setting children up with money for the future but, more importantly, starting a conversation about saving, investing, compound interest and overall financial literacy.

That is one of the best skills we can give kids and grandkids.

This is a personal view, but with our kids and now grandkids, we prefer to invest as trustees for them using low-cost ETFs.

Another option my wife and I like is listed funds, such as Future Generation Global or Future Generation Australia.

What I like about these two funds is that the board and managers work on a pro bono basis, and 1% pa of net assets is donated to youth mental health.

Maybe this is an opportunity to teach your kids about something that is a responsibility of those of us who have done okay with money, to help others.

Our government cannot do everything.

A final idea, and one where I am totally biased, is Fundlater, a product offered by InvestSMART. My bias is that I chair the company and own shares in it.

But I think it is a great idea.

We've done this for our four little granddaughters.

You invest $4000 into Fundlater, we chose the ethical option, and InvestSMART adds $6000. This is paid back in $300 monthly amounts over 20 months. There is no interest, but there is a monthly account fee.

Once the app showing the four accounts is up, and while the little ones are too young to be involved, I do enjoy showing our adult kids how the grandkids' money is doing.

Extra money can be added at any time, such as birthdays, or you can add another $4,000 and off you go again. Clever idea, I wish I had thought of it.

Sure, bonds are also a simple option.

The real point here is no matter which way you go, you are doing something, and this is the real issue.

My parents did this for me and my sister and the money helped hugely with starting my business when I was in my late 20s.

It was also a topic of conversation over the dinner table a few times a year and developed my interest in money, which became my career.

What to read next

• Ask Paul: How to invest for our grandchild in Australia?
• Why parents are turning to bonds for kids
• Can I set up a super fund for my kids?
• How to help your kids manage an after-school job
• Public v private: How to plan to afford school fees

For many investors, the word stagflation sounds like something best left in an economics textbook.

It may conjure memories of the 1970s when oil shocks, stubborn inflation, weak growth generated a market environment that challenged the standard playbook.

Australia battled double-digit inflation throughout most of that decade.

This story sounds familiar.

The combination of sticky inflation, a softening US labour market and rising fiscal strain across developed economies is pushing that era back into view.

Add a conflict that threatens global energy supply chains and you have a set of conditions that should prompt every investor to ask a serious question: does my portfolio reflect the world as it is, or the world as it was?

Stagflation is an uncomfortable mix.

Inflation stays higher than expected, while economic growth slows and confidence weakens. It is challenging because the usual policy responses can work against each other.

Cutting rates to support growth can risk reigniting inflation. Keeping policy tight to tame prices can put more pressure on households, business activity and markets. For investors, that means there is less room for complacency.

What is stagflation and why does it matter now?

The era of low inflation, strong growth and abundant conviction is behind us, at least for now.

What is emerging instead is a far less comfortable regime, where inflation remains sticky, growth is uneven.

Stagflation appears as the base case, a Goldilocks scenario of low inflation and high growth is not on the cards, with the best case being an awkward middle in which growth is uneven and conviction is low.

Understanding how portfolios performed during the last major stagflationary period can help investors think more clearly about the risks today.

What assets perform best during stagflation?

1. Gold tends to earn its keep when confidence in the broader system starts to erode

Gold was the standout of the decade, rising from around US$35 per ounce at the start of the 1970s to over US$500 by 1980.

Gold has been in the news recently for good reason. In periods of sticky inflation, policy uncertainty and geopolitical tension, gold can behave differently to other commodities because it is also a currency and a store of value.

It has been one of the standout performers in the current cycle, supported by central bank buying, investor demand and a renewed focus on portfolio diversification. Gold, and the companies that mine it, can play an important role when confidence in traditional financial assets is being tested.

2. Real assets matter

In a world where inflation proves sticky, owning assets with some linkage to prices can make a difference.

Toll roads, pipelines, utilities and airports tend to carry revenues explicitly or implicitly linked to inflation - when prices rise, so too, over time, do their cash flows.

In the inflationary period that followed COVID, specifically in calendar year 2022, global listed infrastructure outperformed broader developed market equities.

The logic is unchanged: assets with genuine pricing power, long-dated cash flows and inelastic demand are exactly what you want to own when inflation erodes the real value of everything else.

3. 'Value' companies outperformed

This may surprise investors conditioned by fifteen years of growth dominance, but the logic holds.

When inflation is elevated and discount rates rise, the present value of distant future earnings falls sharply.

Growth stocks, priced on earnings many years out, are disproportionately exposed. Value stocks tend to earn their returns sooner and cluster in sectors, materials, energy, financials, that benefit from inflation rather than suffering under it.

Is today's stagflation different from the 1970s?

It's worth noting that today's inflation has different drivers: tariffs, geopolitical fragmentation and energy supply disruption rather than pure oil shock. Central banks have more established frameworks.

Technology has introduced genuine productivity tailwinds.

But the underlying portfolio logic remains sound.

In periods where inflation is sticky and growth is below trend, owning assets with real cash flows, pricing power and inflation linkage can prove powerful.

Investors can no longer rely on the assumptions that defined the most recent cycles.

Simply riding the benchmark is unlikely to be enough from here.

Over the past five years, benchmark indices in Australia and the US have been driven higher by a narrow group of mega-cap stocks, creating a level of concentration that leaves passive investors more exposed than they may realise.

The next wave of equity opportunities is likely to come from outside those mega-caps, and it will demand a different set of exposures than the last five years.

History may not repeat.

But for those paying attention, it tends to rhyme. And there are opportunities for those who see that.

Even before the conflict we're seeing in the Middle East and the associated disruptions to oil supply and petrol prices, inflation was persistent and well above the RBA's target range of 2% to 3%.

Australians are feeling the impact of rising prices in their hip pockets, and this has more serious implications for retirees and others who rely on investments for income.

We're already seeing prices rise across many areas - not just fuel, and the Reserve Bank of Australia (RBA) is warning inflation could surge above 5.0% this year.

This has the potential to leave retirees considerably worse off, particularly if their income is fixed, and not responsive to inflation.

High inflation erodes the value of returns

Inflation is already sitting at 3.7%, which has fuelled recent rate hikes, and while it's easy to assume higher interest rates are a plus for retirees, this doesn't paint the full picture.

Inflation reduces 'real' (after-inflation) investment returns. Put simply, the income you receive buys less than it used to.

Think of it this way.

Right now, it may be possible to earn around 5.0% on bank deposits. This may sound attractive. However, when we allow for inflation of 3.7%, the 'real' return drops to 1.3%.

It doesn't end there.

The Association of Super Funds of Australia (ASFA) says retirees are facing "higher inflation than the general population" because they spend more on essentials that have risen fastest.

This can be a real problem for retirees whose income streams are not indexed to keep pace with rising prices.

Those on a pension are not immune. As ASFA notes, the age pension has failed to keep pace with the cost increases retirees face.

The upshot is that high inflation can leave retirees financially squeezed - even when interest rates are rising.

In response, retirees may feel they only have two options - cut back spending, or dip into precious capital to maintain their lifestyle.

But there is another alternative that is often underutilised by Australians retirees. The solution can lie with diversification into established, income-generating investments such as credit.

Credit - low volatility, a shield against inflation

Credit simply refers to lending; it can be public (from a bank) or private (from investors). It's an asset class that has grown significantly in recent years, and as an income-generating investment, it can play a valuable role for retirees, especially when inflation is high.

Mortgages are a common form of credit and, similar to bank loans, the majority of mortgages involve a floating-rate that adjusts in line with interest rates. This may provide investors into these mortgage funds (known as mortgage schemes in the past) better rate protection than, say, other fixed-rate investments.

In addition, mortgages can be a source of predictable income when well managed in a diversified portfolio.

Investments into a mortgage scheme are not government guaranteed and they are not bank deposits. However, the returns can be attractive.

Inflation-responsive returns

As a guide to returns, La Trobe Financial's 12 Month Investment Account, recognised by Money magazine as Australia's Best Private Credit Fund - Mortgages for 17 consecutive years has a consistent track record of performance across market cycles.*

It not only gives investors competitive, inflation-responsive returns underpinned by mortgage assets back by Australian property, but the 12 Month Investment Account is also designed to provide regular monthly income.

In this way, retirees can be confident the investment aims to support a healthy 'real' return, while still having a reliable income.

With a track record spanning 70 years, La Trobe Financial has navigated the full spectrum of economic conditions and unexpected market events. This, combined with disciplined management, is giving Australians planning for retirement or already enjoying it, the opportunity to live their best life, the reassurance of income that's outpacing inflation.

If you're seeking a durable, inflation-responsive income solutions, contact the La Trobe Financial team on 1800 818 818 or visit latrobefinancial.com.au and find out more.

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence No. 222213 Australian Financial Services Licence No. 222213 is the responsible entity of the La Trobe Australian Credit Fund ARSN 088 178 321. It is important that you consider the Product Disclosure Statement (PDS) before deciding whether to invest or continue to invest in any of the funds. The PDSs and Target Market Determinations are available on La Trobe Financial's website.

*Past Performance is not a reliable indicator of future performance

Any Financial product advice is general only and has been prepared without considering your objectives, financial situation or needs. You should, before investing or continuing to invest in the La Trobe Australian Credit Fund, consider the appropriateness of the advice having regard to your objectives, financial situation or needs and consider the PDS for the fund.

When considering whether to invest or continue investing in the La Trobe Australian Credit Fund, you should be aware that (1) an investment in the fund is not a term deposit, and your investment is not covered by the Australian Government's deposit guarantee scheme. Investing in the fund has a higher level of risk compared to investing in a term deposit issued by a bank and (2) there are other risks associated with an investment in the fund. The key risks of investing in the fund are explained in section 9 of the PDS, available on our website.

One of the biggest costs most investors face is tax. Now is the time to ask, "What are you left with after tax?"

Tax-efficient investments do exist. Investment bonds, for example, are 'tax paid'. The investment bond issuer, rather than the investor, pays tax on the underlying returns.

While tax is capped at 30%, issuers aim to enhance underlying tax efficiency.

If you make no withdrawals within the first 10 years, you don't need to provide details of the investment bond, or its returns, in your annual tax return.* After 10 years, any withdrawals you make are fully tax paid and free from personal tax.

Capital gains tax needs to be managed

Tax time can be a sharp reminder of the impact of capital gains tax (CGT).

This is another area where investment bonds can deliver worthwhile tax advantages. No personal CGT applies to withdrawals or switches between investment options within an investment bond.

An investment bond can also be transferred to anyone, including a partner, trust or adult child, without triggering a personal CGT event.

Don't overlook super, but beware of potential tax traps

For many Australians, concessional super contributions provide an incentive to contribute to super and grow their future retirement nest egg.

The maximum level of concessional contributions you can make is $30,000 for 2025-26, increasing to $32,500 for 2026-27. This amount includes your employer's compulsory superannuation guarantee contributions plus any salary sacrifice contributions.

However, there are important limitations to be aware of.

If your income and concessional super contributions exceed $250,000, Division 293 may apply. This results in an extra 15% tax on the lesser of your concessional contributions or the amount above the threshold. Planning ahead is essential.

For Australians affected by Division 293, or the new Division 296 tax on earnings on total super balances above $3 million, investment bonds are proving to be a popular, tax-friendly alternative.

More importantly, investment bonds should be viewed as working alongside your other savings options, not replacing them. Always speak to a financial adviser for personal advice ahead of tax time.

What to read next

• Retirement income - avoiding 'regret risk'
• The hidden money strain for women carers
• How to embrace the start of the financial year

*Investment bonds are 'tax paid' if held for at least 10 years without any withdrawals, and where the 10-year period has not been reset.

In the first two months of 2026, markets followed the playbook. Developed ex-US and emerging market equities were outperforming with a strong global growth outlook and a weakening US dollar.

Gold was trading above US$5000 an ounce for the first time while US indices were treading water on AI jitters.

Then, on the last day in February, the US invaded Iran and began a war that remains ongoing today.

What Trump may have hoped would be a swift operation, toppling the existing leadership and spurring protesters to install a new government, has instead become his trickiest geopolitical entanglement yet.

Equity markets pared their early year gains to be trading down across the world over March, which have more recently rebounded on hopes of a resolution.

The short-term threat is the hit to global growth and inflationary pressure from higher oil prices.

Given the recency of the shock, its impact will only show up in hard economic data with a lag.

Suffice it to say, the longer the war runs, the greater the risk of global recession.

Our base case assumption remains a timely de-escalation without a severe shock to the global economy.

But in any case, it may be the longer-term implications that matter most for investors, long after any resolution in Iran.

Re-thinking portfolio satellites in a fracturing world

Portfolio satellites are used by investors alongside their core allocations to achieve specific goals. More than ever, investors should be considering using these satellites as hedges to geopolitical events.

Russia's invasion of Ukraine accelerated defence spending and European energy diversification.

The Iran conflict is now doing the same for global energy self-sufficiency while further fracturing the US security umbrella and embedding geopolitics as a structural driver of asset prices, rather than an episodic risk to be faded.

For investors, that argues the case for allocations to select exposures in portfolios going forward to help reduce portfolio volatility through a potentially prolonged period of geopolitical tension and global order reshuffling. These include:

Defence contractors

Global defence stocks have been among the best performing since the start of Trump's second presidential term.

In April of 2026 the US proposed a US$1.5 trillion defence budget for FY27, the largest in history and a 50% increase on FY26.

Across the Atlantic, Europe's rearmament is accelerating.

EU defence budgets have nearly doubled from €218 billion in 2021 to a projected €392 billion in 2025, marking the first year all EU-NATO members have hit the 2% of GDP threshold.

To unlock additional fiscal room, 17 member states have activated the EU's national escape clause, permitting defence spending above Stability and Growth Pact limits through 2028.

Germany alone has committed to €162 billion by 2029.

The direction of travel is clear, and defence contractors globally are set to be structural beneficiaries and a potential hedge to geopolitical threats that can cause broader equity market disruption.

Given the breadth of potential beneficiaries, investors can seek to gain diversified exposure to the global defence sector through an ETF, like Betashares Global Defence.

Uranium and energy security

Russia's invasion of Ukraine and the subsequent scramble to wean Europe off Russian oil and gas, thrust energy security to the top of the policy agenda.

The Iran conflict has now re-ignited energy self-sufficiency concerns globally.

As governments reassess baseload power and seek to reduce dependence on hostile suppliers, nuclear energy has re-emerged as a cornerstone of the solution.

As of the most recent COP (the United Nations annual climate change conference), 33 countries, including the US, France, UK, Japan, South Korea, Canada and the UAE, now back the pledge to triple global nuclear capacity by 2050.

With nuclear increasingly recognised as essential for energy independence, decarbonisation and AI-driven electricity demand, the uranium supply chain is entering a structural deficit that favours producers in allied nations.

Given the breadth of the uranium supply chain, spanning mining, exploration, development and production of uranium, modern nuclear energy, or companies that hold physical uranium or uranium royalties, diversified exposure, through an ETF like Betashares Global Uranium ETF, can provide efficient access to the theme.

Critical minerals

Critical minerals, inputs essential for AI data centres, EVs, renewable energy and defence technology, are at the intersection of future technologies and geopolitics.

China controls over 60% of global refined critical mineral supply and 90% of rare-earth magnets.

In response, Western allies are moving decisively: in February, ministers from 54 countries discussed a US proposal to reduce dependence on Chinese supply, while the EU, Japan, Mexico and the US agreed to create price support mechanisms and capital backing for critical mineral projects.

Both the US and Australia have established strategic mineral reserves, and the latest US defence budget dramatically expands investment in domestic critical mineral supply chains.

Selected producers from allied nations, Australia, Canada, Peru and Chile, are well-positioned as key beneficiaries of this government-backed push for supply chain resilience.

With supply chain resilience now a policy priority across allied nations, the opportunity spans the entire critical minerals ecosystem, from miners and processors in Australia, Canada and the Americas, to the companies supplying the inputs that make EVs, data centres and defence systems possible.

The Betashares Energy Transition Metals ETF is designed to capture that breadth, rather than making a bet on individual winners in what remains a complex and evolving structural shift.

The events of early 2026 have reinforced that geopolitics is no longer an episodic risk but a structural force reshaping economies, supply chains and capital flows.

Defence rearmament, energy self-sufficiency and critical mineral realignment are policy-backed, capital-intensive and multi-decade in nature.

For investors with a long-term horizon, maintaining diversified growth exposures to these themes is not simply a hedge against disruption, but a considered response to where structural capital is flowing today and, increasingly, where it may flow tomorrow.

For a digitally-native generation, it's easy to assume that Gen Z investors are building portfolios shaped by social media.

Research from the Australian Securities and Investments Commission (ASIC) suggests that assumption isn't unfounded.

Nearly two-thirds of Gen Z Australians use social media for financial information, while more than half trust "finfluencers" and even AI tools.

ASIC warns that this dynamic is contributing to riskier financial decisions.

But where Gen Z gets ideas and what they do with their money are not the same thing.

Data from Selfwealth by Syfe, based on more than 130,000 Australian investors, shows that Gen Z portfolios are not radically experimental or trend-driven. In fact, they look remarkably considered.

Gen Z investors hold an almost even split between ETFs and individual stocks, closely mirroring Gen X. This stands in contrast to other generations, Millennials are far more ETF-heavy, while Baby Boomers lean towards individual stocks.

If social media is such a dominant influence, why do Gen Z portfolios resemble those of a pre-digital generation?

Exposure doesn't equal execution

Gen Z may be discovering investing through TikTok or YouTube, but discovery is not decision-making.

ASIC research highlights that while social media is a primary entry point, 60% of Gen Z investors also use professional or formal sources, and half turn to family and friends for guidance.

What we're seeing is not blind adoption, but cross-referencing. Gen Z investors are combining digital discovery with more traditional financial principles, testing, validating and filtering what they consume before acting on it.

Social media, in this sense, is functioning less as a source of truth and more as a starting point. It is closing the awareness gap that existed for previous generations, acting as a gateway into broader financial education.

ETFs have reset the starting point

The more meaningful shift is structural.

ETFs have transformed diversification from a high-capital, complex strategy into the default entry point for new investors.

Today, just a single trade and decision point can immediately provide broad exposure to global markets, something that once required significant time, experience and confidence.

And that global diversification has become even more important - indeed, we've seen growing demand even just in the last quarter in the purchase of ETFs that offer international exposure versus purely domestic.

For Gen Z, that means they are enjoying a substantial leg up, by starting their investing journey already diversified.

This helps explain the balance we're seeing. ETFs form the foundation of portfolios, while individual stocks offer a way to engage more actively and express one's own personal views and "bets".

In many ways, younger investors are now using tools that enable more balanced outcomes than previous generations had access to at the same age.

A generation that's informed - but not immune

None of this contradicts ASIC's warning.

There are clear pockets of risk. Nearly one in four Gen Z Australians hold cryptocurrency, and many take a short-term or speculative approach, sometimes influenced directly by social media content.

Gen Z is not a monolith. While many are diversified and long-term focused, others are more exposed to hype-driven decision-making. For Selfwealth users, the former is more common.

Generational differences still matter

Looking across demographics reinforces this pattern.

When we look at our own Selfwealth by Syfe platform data, we see that Millennials, for example, are leaning more heavily into ETFs, with around 70% of their portfolios allocated to these vehicles, suggesting a strong preference for diversified, long-term strategies.

Baby Boomers, by contrast, remain more active stock pickers, with roughly two-thirds of their portfolios in individual equities.

Gen Z sits between these approaches, not as passive as Millennials, not as stock-heavy as Boomers, but notably aligned with Gen X in its balance.

That alignment is unlikely to be coincidental. While access to information and tools is reshaping how Gen Z invests, Gen X, who parent much of this cohort, may still play a quiet, supporting role in shaping attitudes to risk and diversification, whether through direct advice or observed behaviour.

This isn't simply behavioural. It reflects a convergence of better access to information, improved financial literacy, and tools that make diversification easier than ever before.

Rethinking the Gen Z narrative

The idea that Gen Z investors are impulsive or purely trend-driven doesn't fully hold up.

They are navigating a complex information environment shaped by algorithms, influencers and constant content.

But they are also demonstrating an ability to filter, balance and apply that information in a way that reflects long-standing investment principles.

For the industry, this presents both an opportunity and a responsibility: to meet Gen Z where they are, while equipping them with the tools and education needed to make informed decisions.

Because if the data tells us anything, it's this: Gen Z investors aren't simply following trends.

They're interpreting them, and often investing more thoughtfully than they're given credit for.

And while access and tools are doing much of the heavy lifting, habits still form early. In my own household, that means investing my children's savings in a globally diversified portfolio of ETFs from day one.

The biggest advantage you can give the next generation is firstly, time in the market, where compounding does the heavy lifting but even more importantly, to educate them on the importance of investing from an early age.

For many of us, higher interest rates chiefly mean higher home loan repayments. But the impact will extend a lot further, providing both opportunities and challenges for investors.

Let's take a look at five key ways rising rates are likely to reshape the investment landscape.

1. Returns on cash rise but there will be strings attached

On the face of it, higher rates can make savings accounts more attractive.

There is a catch though.

A large number of savings accounts impose strict conditions around deposits and withdrawals before 'bonus' interest is paid.

We know from a review by the Australian Competition and Consumer Commission (ACCC) that consumers often find it hard to meet these conditions.

In fact, the ACCC found that in any given month, over seven in ten bonus interest accounts didn't pay bonus interest.

A more certain return is available through private credit - essentially non-bank lending.

GPS Investments, for example, typically pays 1-2% more than cash deposits.

As a guide, our Arkus Fund pays a return of 6.50% with zero fees. And you get the same flexibility to invest on a regular basis as a savings account, with the option to make monthly withdrawals.

The added upside of a private credit fund is that you don't see your savings every time you bank online, which can reduce the temptation to dip into the funds.

2. Regular distributions are likely to make private credit even more attractive

As part of the 'fixed interest' class of investments, private credit funds can be a source of regular income, often with distributions paid monthly.

Right now, passive income can be especially valuable.

Australians are battling high living costs and skyrocketing fuel prices, yet the past year has seen wages growth of just 3.4% - below the rate of inflation of 3.7%.

It's not just about income. As the name suggests, private credit funds do not trade on public markets. This means there is none of the volatility we've seen on sharemarkets over the past year - volatility that can leave investors exhausted, and their portfolios worse for wear.

3. Investors may take unnecessary risks

As we all grapple with the cost-of-living crunch, it can be very tempting to look for investments promising elevated returns.

It pays to remember though that high returns always go hand-in-hand with increased risk.

In the private credit market, for instance, some funds are advertising returns of 10%-plus. Make no mistake, this sort of return can come with far higher risk than investors may realise.

These funds tend to have high loan to value ratios, with extremely low buffers if anything goes wrong. The underlying loans are often secured by second registered mortgages, which rank behind first mortgages in terms of repayment priority if a default occurs.

By contrast, at GPS, we always maintain lending buffers of at least 30%, and our loans are secured by first registered mortgages - the highest level of security, which lowers risk for our investors.

4. Experience will shine through

Whether it is listed companies, share funds or private credit funds, the next few months will test newcomers to the market simply because these asset providers lack experience across a range of economic conditions.

In the private credit market, a significant number of new funds have launched in recent months, often by providers with worryingly little experience.

This lack of experience means not every private credit fund will emerge from the current economic climate unscathed.

GPS Investments has been funding new homes in the south east Queensland growth corridor for over 30 years. This depth of experience backed by our conservative approach, and in-depth knowledge of the market we serve, saw us successfully navigate the global financial crisis as well as the COVID pandemic.

That experience will stand us - and our investors - in good stead as we forge a path through the current period of high rates.

5. Diversification is even more important

Diversification has long been seen as a cornerstone of successful investing. It reduces volatility, lowers risk, and helps achieve more consistent returns.

Diversifying is especially important as a risk management strategy when rates are rising as it helps soften the impact of stock market volatility.

Yet fewer than one in two Australians believe they have a diversified portfolio.

Now could be the time to add fixed interest investments such as private credit, to your portfolio.

It can give you the benefit of regular income and above-inflation returns. And options like the Arkus Fund, which charges zero fees, makes investors' money work even harder at a time when every dollar counts.

A new report reveals the strength of Australia's private credit sector compared to global markets, which is attracting substantial offshore capital, particularly from high-net-worth individuals, family offices and insurance companies.

This is according to the Australian Investment Council's (AIC) 2026 Australian private capital yearbook, which found that the country's economic outlook relating to tariffs, geopolitical tensions and demographic factors puts it in good standing among global private credit investors.

Private wealth investors are expected to deploy more capital to the sector, with "substantial potential" for large Australian private credit managers to attract Asian and European money. However, this is contingent on better promoting Australia's diversified economy internationally.

Preqin estimates there is $5.4 billion in closed-ended private credit funds, and a further $40 billion in net asset value in open-ended funds.

"The influx has been both beneficial and challenging - while validating the market's appeal, it has intensified the need for deployment discipline as managers compete to put capital to work," the report read.

"The sector anticipates accelerated growth driven by diversification demands from investors seeking alternative return sources."

Conversely, Australian investors are investing "significant capital" to global private credit funds.

Several issues in the local private credit market, however, play at large. This includes the need for deployment discipline and better enhanced transparency.

"A critical debate centres on appropriate fund structures for private credit. Do private credit's shorter-duration assets make it better suited to open-ended funds than traditional private equity? If so, private credit managers need to maintain rigorous discipline in managing capital flows and provide clear communication about redemption opportunities," the report said.

"There is broad emphasis on the importance of investor education around fund mechanics and the fine print governing capital access."

Overall, the Australian private capital sector reported assets under management (AUM) at record levels of $161 billion.

Private equity and venture capital together account for $72 billion. Assets across real estate, infrastructure and natural resources came to $83 billion.

Australian private capital funds also outperformed globally, delivering a return of 12.7% per annum, including both realised and unrealised returns.

Private equity saw $13.6 billion in deals across 147 transactions in 2025, with technology accounting for about one third.

AIC chief executive Navleen Prasad says the yearbook shows private capital is playing a bigger role in funding Australia's future, but that regulatory friction and uncompetitive policy settings risk pushing investment offshore.

"Other countries are falling over backwards to court international capital, including our world-class superannuation pool. Presenting a Team Australia front is smart, but where are the much-needed reciprocal programs selling Australian opportunities to international investors?" he says.

In recent years, the study found family offices became more active private capital investors, though in volume terms, institutional investors, including superannuation funds, still dominate.

Family offices' demand for venture capital is more pronounced. Almost half of all venture capital investors studied between 2021 and 2025 were active Australia-based family offices.

This article first appeared on Financial Standard

Investing is one of the most effective ways to build wealth over time - but it also comes with tax consequences that can catch investors off guard. Whether you're buying shares, dipping into exchange-traded funds (ETFs), trading crypto, or investing in managed funds, understanding how tax applies can make a meaningful difference to your after-tax returns.

Here's a straightforward guide to how the tax system works across the most common investment types in Australia-and what to watch out for at tax time.

The basics: Income vs capital gains

Before diving into specific investments, it's important to understand the two key ways your investments are taxed:

• Income: Earnings such as dividends, distributions, and interest are generally taxed in the year you receive them at your marginal tax rate.
• Capital gains tax (CGT): Applies when you sell an investment for a profit. If you've held the asset for more than 12 months, you may be eligible for a 50% CGT discount.

The Australian Taxation Office (ATO) requires you to report both types of income in your annual tax return.

Shares: Dividends and capital gains

Investing in shares is popular for both income and growth-but it comes with a dual tax treatment.

Dividends and franking credits

When Australian companies pay dividends, they may include franking credits, which represent tax already paid by the company. These credits can:

• Reduce your overall tax bill, or
• Even result in a refund if your tax rate is lower than the company tax rate.

You must declare both the dividend and the franking credit as income, but you also receive a tax offset for the credit.

Selling shares

If you sell shares for more than you paid, the profit is a capital gain. Key points include:

• Gains are taxed in the year of sale-not when proceeds are received.
• Losses can be used to offset gains, but not ordinary income.
• Holding shares for more than 12 months may qualify you for the CGT discount.

A common mistake is forgetting to include brokerage costs in your cost base, which can reduce your taxable gain.

ETFs: Similar to shares, with a twist

Exchange-traded funds (ETFs) are often seen as simple, low-cost investments-but their tax treatment can be slightly more complex than shares.

Like shares, ETFs can generate:

• Income distributions (often quarterly or semi-annually)
• Capital gains when you sell your units

However, ETF distributions may include multiple components:

• Dividends (sometimes with franking credits)
• Interest income
• Foreign income
• Capital gains

Each component is taxed differently, and you'll typically receive an annual tax statement breaking it all down.

One key point: even if you reinvest your ETF distributions, you still need to declare the income for tax purposes.

Managed funds: Watch the distributions

Managed funds operate similarly to ETFs but are often actively managed. From a tax perspective, they can be one of the trickiest investment types.

Annual distributions

Managed funds distribute income each year, and you're taxed on your share of that income-even if:

• You didn't receive it in cash (e.g. reinvested), or
• The fund hasn't actually sold underlying assets you're aware of

This can lead to the frustrating scenario of paying tax without receiving cash.

Capital gains within the fund

If the fund manager buys and sells assets during the year, any capital gains may be passed on to investors as part of the distribution. This means:

• You can be taxed on gains even if you didn't sell your units
• Timing matters-buying just before a distribution can result in an unexpected tax bill

Understanding the distribution statement is critical, as it outlines how each component is taxed.

Crypto: Not tax-free or anonymous

Cryptocurrency has gained popularity, but there's still a misconception that it operates outside the tax system. In reality, the ATO has increased its focus on crypto transactions.

CGT applies

Crypto is generally treated as a capital asset, meaning CGT applies when you:

• Sell crypto for Australian dollars
• Swap one cryptocurrency for another
• Use crypto to purchase goods or services

Each of these events can trigger a taxable gain or loss.

Record-keeping is essential

Crypto investors need to keep detailed records of:

• Purchase dates and values
• Sale or exchange details
• Wallet transfers

Given the frequency of transactions, using portfolio tracking tools can make tax reporting much easier.

Personal use exception

In limited cases, crypto used for personal transactions may be exempt-but this exemption is narrow and often misunderstood.

Offsetting gains and losses

One of the key advantages of the tax system is the ability to offset capital gains with capital losses.

For example:

• If you make a $10,000 gain on shares and a $4,000 loss on crypto, you'll only pay tax on the net $6,000 gain.
• Losses can be carried forward to future years if not fully used.

However, losses cannot be used to reduce salary or other income.

The importance of timing

When it comes to investments and tax, timing can have a big impact.

Holding period

Holding assets for more than 12 months can reduce your CGT liability through the discount.

End of financial year planning

As June 30 approaches, investors often:

• Realise losses to offset gains
• Defer selling assets to the next financial year
• Review portfolios for tax efficiency

However, tax should never be the sole driver of investment decisions-commercial outcomes still matter.

Common tax mistakes investors make

1. Forgetting to declare income
   Distributions, dividends, and crypto transactions are all reportable.
2. Misunderstanding reinvestment
   Reinvested income is still taxable.
3. Poor record-keeping
   Missing purchase records can lead to overpaying CGT.
4. Ignoring foreign income
   Many ETFs and funds include international investments with additional tax implications.
5. Assuming crypto is invisible
   The ATO receives data from exchanges and actively monitors compliance.

Keep it simple and stay organised

While the tax rules may seem complex, the key to managing them effectively is organisation:

• Keep detailed records of all transactions
• Review annual tax statements carefully
• Understand the difference between income and capital gains
• Seek professional advice for more complex portfolios

Conclusion

Investing across shares, ETFs, crypto, and managed funds can be a powerful way to grow your wealth-but tax is an unavoidable part of the journey.

The good news? With a basic understanding of how each investment is taxed, you can avoid common pitfalls, make more informed decisions, and potentially improve your after-tax returns.

In the end, it's not just about what you earn-it's about what you keep.

Reader question

Hi Paul, we're 63 and 58 years old. We have a small mortgage on our investment property in Queensland.

We're retired (we hope). We have $400,000 in super between us and $500,000 to invest from the sale of our primary home.

Should we put much more in our super accounts (half the $500,000) leading up to pension age and make smart spending and investment choices with the remaining $250,000?

Health has impacted our working life so we're currently seeing Australia in our van.

We are pretty much minimalists and are planning to live in the investment property down the track. Can you see a financial path for us? Hope we haven't confused you. - Chris and Jonna

Paul's response

One thing is for sure, Chris and Jonna, I can certainly see a terrific life adventure for you. I'm still having a chuckle at you saying, "We're retired. We hope".

I know what you mean. It is one thing coming up with a life plan and another thing making your money fit your plan. You are off to a cracking start, though.

I get to enjoy some very funny conversations about money and life plans.

Once on a flight, an executive asked me how much he would need to retire. He had no idea what his annual spending amount in retirement would be. We chatted about holidays, paying for his family home, cars, insurance, healthcare, entertainment and all the stuff that costs money, which added up to a large number. He wanted to retire at 65, so had to multiply his annual required spending amount by 17. At this point he went pale.

Sadly, too few of us have got a realistic plan about how we want to live in the years to come and how to pay for it. But your plan sounds realistic to me. In the example above, assets did not meet the dream. In your case, I think they will.

You have given me the broad information I need. First up, you have had some health issues and are vanning around Australia. My concern is, of course, what backs up this dream lifestyle if one or both get ill and need to be near care? But you will have your investment property that can become your home. This also gives you an asset that you could use to fund aged care if required in the future.

You have a logical start with the van and a logical end, if required, with your investment becoming your home. The spending gap between beginning and end is, of course, filled by your current assets. Let's take a look at these.

First up, I think I am safe in assuming that with a small mortgage your investment is producing surplus cashflow after expenses, but to be safe I'll call that neutral.

Forgetting where it is invested for a moment, you have an additional $900,000 in your super and proceeds of the sale of your home. History suggests that on a diversified amount of money, you could spend some 5% of the capital sum each year and your capital would keep pace with inflation over time, that is, you would die with $900,000 plus inflation.

Here is the first question. Does 5% of $900,000 or $45,000 cover your annual van lifestyle? Out of curiosity, let's look at $70,000 a year, which I suspect is more than you are spending. That amount would require a return of about 8% on your $900,000. If we look at historical guidance from assets such as shares, we find that since 1900, the average return, including dividends has been a bit more than 10%pa, but 100% in shares is a pretty risky strategy for retirees. Let's look at the returns for balanced type superannuation funds.

Compulsory super started about 34 years ago, the typical large, low-fee, balanced fund being around 8% over these decades. This means that $70,000 a year from your $900,000 is not crazy.

Second question is: if you do need $70,000 a year to enjoy your van life, are you happy to run down the real value of your $900,000? I should say in your shoes, I would be. At life expectancy of 81 for men and 84 for women, you would still have real buying power with your $900,000. You'd also have an investment property worth a lot more.

The magic sauce to your magic pudding is your ability to get an age pension at 67. Talk to Services Australia, an independent adviser or your accountant, but I think it makes sense after the sale of your home to turn your investment property into your home.

You must seek your own advice but general information suggests this may require you to live there for six months. Once it is established as your home, you could move out and rent it for up to six years at a time. This is important because your home is an exempt asset under the assets test for an age pension.

You and all Australians are entitled to own a home that is exempt as an asset for pensions, land tax and capital gains tax on the sale. Sure, you would not get a lot of pension at first, but as you cut into your $900,000 and inflation indexing increased the assets test level, you would get more. This is well worth understanding as even a small amount of age pension could help to protect your investment assets.

We have not covered 'how to invest', because once again you need professional advice based on the complete knowledge of your personal circumstances. In general terms, it is hard getting money into super, but once you reach retirement age, very easy to get it out.

In your position, I would be looking at putting the $300,000 that is allowable from the sale of your home into super. Your fund is one source of advice on the merits of this or, of course, an adviser.

Anyway, you have asked me can I see a financial path for you. Obviously, when it comes to health, nothing can be guaranteed, but your plans and your financial resources seem to match up.

Go for it. And please send a photo or two to us here at Money as the years go by.

What to read next

• Why thousands of retirees are better off with less super
• The grey nomads' guide to money
• How to get free advice from your super fund
• How much super you need for a comfortable retirement now
• Why one-off financial advice is so hard to get

They discuss gold's key advantages over other elements, how much exists (about 219,000 tonnes ever mined), and its role in Australia's history from the 1851 gold rush through to the establishment of the Sydney and Perth mints and the Eureka Stockade.

They explore how currencies were once pegged to gold, why the link ended during the depression and why central banks still buy gold, including the RBA's 80 tonnes largely stored in London.

Episode timestamps

01:19 Why gold works

02:57 How much gold exists

03:35 Australia gold rush

05:01 Gold standard ends

06:21 Central Bank gold

07:53 Gold price outlook

09:00 Selling physical gold

10:41 Investing with ETFs

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Friends With Money podcast FAQ

What is the Friends With Money podcast?

Friends With Money is a weekly personal finance podcast by Money magazine, offering expert insights on investing, budgeting, superannuation, property, and other money strategies for everyday Australians.

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Who hosts Friends With Money?

Episodes are hosted by Vanessa Walker and Tom Watson from Money magazine, featuring expert guests and real conversations about money.

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The Friends With Money podcast covers topics including banking, property, budgeting, superannuation, investing, saving, insurance, employment, travel and more.

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Each episode dives into real conversations about money - how it's earned, shared, saved, and grown - with tips and insights that make finance simple and relatable. Perfect for beginners and seasoned investors alike, it's your go-to guide for building better financial habits.

There's no arguing that right now, we are facing uncertain times.

Investors don't like it, and nor do investment markets.

However, we only have to look at recent history to see how investors can navigate a path to bring stability to their portfolio - and their wealth.

Learnings from the COVID pandemic that apply today

It's been six years since the start of the COVID pandemic. At the time, it was an incredibly destabilising event that saw sharemarkets tank, and sent consumers panic-buying.

Sound familiar?

Of course, the underlying cause of instability was very different from today.

Even so, we can take three valuable lessons from the pandemic, and apply these to invest for stability in today's uncertain times:

1. Don't ignore your investments

Back in 2020, we saw plenty of people who were so worried by the situation that they overlooked their investments.

That's a mistake. Yes, there is a lot to unpack right now, and it can all seem overwhelming.

But your money matters. Keep an eye on your investments, and be mindful of how they could be impacted by current events.

2. Investors tend to focus on homegrown assets

When global issues arise, investors tend to bring things closer to home. We saw this during the pandemic when investors typically focused on homegrown investments while shunning overseas asset markets.

The good news is that Australia is a well-regulated market with plenty of quality investment opportunities.

3. Investors look for flexibility

When surrounded by uncertainty, investors seek the reassurance of being able to access their money sooner. They don't want to be locked in for the long term or face rigid terms.

This trend drove GPS Investments to launch our Arkus Fund, which has been an instant hit with Aussie investors. By offering slightly lower returns, we are able to give investors the reassurance of increased access to their money - this resonated with Australians during the pandemic, and continues to do so today.

We're seeing a flight to safety

The feedback we are getting from investors right now is that they want to keep their money working hard.

At the same time they are concerned about investing in listed companies that may have a connection to the oil industry, or which could be impacted by conflict in the Middle East.

Overarching these concerns, no one knows if the current conflict could last for days, weeks, or even months.

The uncertainty is seeing Australians embrace investments that don't demand large chunks of capital. This has driven a fresh wave of interest in the Arkus Fund.

Investors can get started in Arkus as little as $1, and make regular transfers into the fund - so you're still actively investing. Distributions are paid monthly (extra income to help cover rising fuel bills), and Arkus still offers the freedom to make monthly withdrawals, so you're not locked in.

Better still, the Arkus Fund has that reassuring homegrown element.  The underlying asset is first registered mortgages over residential townhouse and apartment developments within a 2-hour drive of Brisbane - a growth corridor that KPMG says is outpacing the rest of Australia for population growth.

Time to invest in experience

One thing is for sure.

Now is the time to focus on investment providers with experience spanning past uncertainty.

With our 30-year track record, GPS Investments has been through it all - from the Asian financial crisis of the late 90s and the Dot Com bubble of 2000, through to the Global Financial Crisis of 2008-09, the COVID pandemic of 2020 and of course, today's Middle East crisis

Let me stress, none of us is enjoying the current instability. As human beings, the GPS team shares the same concerns as all Australians.

But as investment professionals we have been through this before, and we have the experience to know the path forward.

Take a fresh look at your investments, be mindful of being able to access your money if it's needed, and look for an investment provider that has stood the test of time.

Tick these boxes, and you can be confident of bringing stability to your portfolio even in these uncertain times.

It was almost 12 months ago that the Liberation Day tariffs triggered a sharp sell-off in Australian and global share markets. Since then, we've seen a strong rebound in equities, record highs for gold and silver, and no shortage of geopolitical shocks.

Now, investors are once again facing volatility. Ongoing conflict in the Middle East has pushed oil prices sharply higher, reigniting inflation fears just as many hoped cost-of-living pressures were easing. The big question this Easter is how to protect your nest egg from cracking and ensure your portfolio is built to handle inflationary and rising interest rate pressures.

Why are interest rates rising again

The Reserve Bank of Australia is walking a tightrope. Inflation remains above its comfort zone, the job market is still relatively tight, and policymakers have been clear that bringing prices under control is their top priority. Even if that slows economic growth.

Recent oil price shocks have made the RBA's job harder. Transport makes up a relevant share of Australia's inflation basket, so higher fuel prices quickly flow through to everyday costs. That's one reason markets have shifted from expecting rate cuts to pricing in further hikes.

The message for investors is simple: interest rates may stay higher for longer, and portfolios need to be able to cope with that reality.

A focus on energy and materials

Higher interest rates don't mean shares are off the table. They do, however, change which types of companies tend to perform better.

In rising rate environments, the market often favours businesses with strong cash flows and pricing power. These types of businesses are generally better positioned to protect their profits when inflation sticks around.

Energy and materials companies are a good example. Commodity producers often benefit from higher prices, and the Australian share market already has strong exposure to these sectors. Historically, they have tended to outperform during inflationary periods.

On the flip side, sectors like technology and property (including REITs) can struggle when interest rates rise. Higher rates reduce the value of future earnings, which can pressure valuations. Consumer discretionary shares may also feel the pinch as households adjust to larger mortgage repayments and rising rents.

Rethinking income beyond bank dividends

Generating reliable income has become harder. Dividend yields across the Australian market have fallen over recent years, and relying solely on traditional dividends may no longer be enough to keep up with the cost of living.

One approach is to be more selective by focusing on higher-yielding companies while still maintaining diversification. The goal is not to chase the highest yield at any cost, but to find sustainable income streams with sensible risk.

Some investors are also turning to covered call strategies. In simple terms, these strategies involve generating extra income by selling options over share portfolios. During volatile markets option premiums tend to be higher, which can boost income and help smooth returns when markets move sideways or fall.

Fixed income: floating instead of fixed

Traditional fixed-rate bonds usually struggle when interest rates rise, because newer bonds offer better yields, pushing down the value of older ones.

Floating-rate bonds work differently. Their income payments reset as interest rates move higher, which can make them more resilient in a rising rate environment. For income-focused investors, this can mean steadier returns with less price volatility.

Including floating-rate exposure alongside traditional bonds can help balance a portfolio as rates change.

Commodities as protection against inflation

Commodities aren't a direct interest rate play, but they are closely tied to inflation.

During periods of high inflation and slowing growth, real assets like commodities and gold have historically helped protect purchasing power. They're not about quick gains, but about diversification and resilience when traditional assets face pressure. Commodities are the insurance you hope won't perform, but glad you have them when you need it most.

Broad commodity exposure or targeted precious metals allocations can both play a role, depending on an investor's goals and risk tolerance.

Don't overlook global diversification

Australia isn't moving in lockstep with the rest of the world. While the RBA is tightening, other major economies are further along the cycle or already easing.

Investing globally helps spread risk and reduces reliance on local economic conditions. It also provides access to long-term growth themes like artificial intelligence, renewables and automation, that exist regardless of where interest rates sit in the short term.

Currency movements matter too. Higher Australian rates can support the dollar, which may reduce returns from unhedged offshore investments. For this reason, many investors are increasingly considering currency-hedged options.

Staying steady through uncertainty

Rising interest rates don't require drastic changes or panic selling. They do, however, reinforce the importance of diversification, flexibility and discipline.

Markets move in cycles, and volatility comes and goes. The most resilient portfolios are built to weather all conditions.

This Easter, protecting your nest egg is less about finding the biggest chocolate egg, and more about making sure your basket is well-balanced enough to enjoy the whole hunt, whatever the market brings.

It's the advice that's been passed down at kitchen tables across Australia with the same confidence as a family recipe.

For decades, buying property has been a reliable formula for building wealth, how security is a way to help give your children a better start than you had.

For many years, the advice was largely correct. But for the generation now trying to make it a reality, the math has stopped adding up.

Recent research from Propertyology found the average value of the main residence for Australian households has risen about 560% over the past 25 years. This is significantly further ahead of the increase in the average income for Australians in that time.

This means the vehicle most Australian families relied on to build and pass on wealth has become, for many young people, the single biggest barrier to starting at all.

The advice hasn't changed. But the Australia it was written for has.

The data paints a stark generational picture.

Baby Boomers hold the highest net worth of any generation while Gen X households have the most wealth in property and shares. Millennials, by contrast, carry significant mortgage debt, student loans, and the rising cost of simply getting started.

They are not behind because they are less capable. They are behind because the asset prices that made their parents wealthy are now the barriers preventing the same story from repeating.

And yet, something else is happening beneath the surface.

Younger Australians are not disengaged from wealth creation - they are engaging differently. According to the ASX Australian Investor Study 2023, 43% of Gen Z already hold Australian shares. They are also the cohort most likely to hold ETFs (33%), invest internationally (25%), and hold cryptocurrency (31%). Far from being financially apathetic, they are digitally fluent and globally minded in how they approach investing.

Millennials, often described as the "bridge generation", are reinforcing that shift. The same study shows they favour ETFs and digital investing platforms, prioritise risk awareness in decision-making, and are more likely than older generations to factor ESG considerations into their investment choices. They sit between the property-driven wealth model of their parents and the diversified, digitally enabled portfolios of their children.

Alongside property, long-term share market investing has quietly delivered strong returns for decades - without attracting the same cultural reverence.

The difference is that most Australians haven't been invited into that conversation early enough for it to matter.

Minor investing matters more than ever

Over the past few years, CMC Invest has seen an increase in parents reaching out about Minor Trust Accounts as ways to invest for their children's future and ensure they have a financial jumpstart once they reach adulthood.

That interest is not theoretical. The Finder Wealth Building Report (September 2024 survey) found that around 34% of Australian parents have already bought shares or other investments for their children. Behaviour is shifting.

Accounts designed to build future savings for your kids, provide a unique bridge between a standard savings account and a formal family trust. However, parents should be aware that minor trust accounts may have different tax treatment depending on the structure and income generated, and it may be worth seeking independent advice to understand any potential implications.

But beyond supporting your children with a nice nest egg, investing for your kin can help set them on a path to lifelong financial success.

1. Financial literacy that sticks

Research has found that from a young age, children can begin to grasp delayed gratification, risk, and the relationship between decisions today and outcomes tomorrow. If you bring your child along on the journey of their investing account, it can serve as a practical teaching tool where they can see their balance grow.

At the same time, it provides a natural opportunity to explain that investments can rise and fall in value and that outcomes are not guaranteed. Strong financial habits formed early tend to be the ones that last.

2. Time doing the heavy lifting

The single most powerful variable in long-term investing is not stock selection or market timing, it is duration.

An investment started early and held consistently can represent the difference between a meaningful asset base and a standing start. While time can help smooth out short-term volatility, investments can still experience periods of loss and should be approached with a long-term mindset. Starting early is not a nice-to-have - it is the whole strategy.

3. A head start

A young adult facing a uni degree, a rental bond, a house deposit or simply the desire to head overseas for a holiday before settling down needs capital.

A minor investing account, started early and contributed to consistently, can become the financial foundation for all of those moments.

4. Accessibility

Modern investing platforms are professional, slick, and user friendly - making it straightforward for anyone interested to open an account, contribute flexibly, and access thousands of local and international shares and ETFs and crypto with low or no brokerage on many markets.

The barriers that once made this feel like a product for the wealthy have largely fallen away in recent years making it more accessible than ever.

A changing landscape

The shift we are seeing across investing from different Australian generations is not about decline but change in how we invest, our financial strategies, but also in opportunity and accessibility.

For most of modern financial history, investing for a child's future required wealth to begin with. That is no longer true.

The ability to give a child a real stake in the global economy is now available to Australian families of all shapes and sizes in a way it never has been before.

As with any financial decision, it's important for families to consider their circumstances and understand both the potential benefits and the risks involved.

Minor investing accounts will not solve every challenge currently facing young Australians. But they are a practical, and now widely available tool, to give our kids something no amount of advice can substitute for: a head start, a foundation, and the knowledge that someone invested in their future before they were old enough to do it themselves.

Australians are good at growing their super. We're not so good at switching from the accumulation phase to spending our super in retirement.

That's largely because of FORO - the 'fear of running out' of money. And it's understandable. Today's retirees may need to stretch their super over 20, even 30, years of retirement.

Retirees often try to reduce longevity risk by saving their savings - living frugally, instead of relishing retirement.

This has fuelled regret risk. That's when retirees realise all too late that they've missed the boat to go harder on super savings at an early stage, when they were better placed physically to enjoy the lifestyle pursuits we dream of in retirement. Fortunately, there is a solution.

Lifetime annuities can hold the key

More than four in five retirees invest their super in an account-based pension. It's an appealing option with tax-free returns and the flexibility to make lump-sum withdrawals.

The downside is no guarantees about how long the money will last. That's where lifetime annuities can make a difference.

Lifetime annuities pay an income guaranteed for life 

When an annuity is purchased with super savings, investment returns and the income received are tax-free.

Even better, usually only 60% of a lifetime annuity is included in the age pension assets test.

The drawback is less flexible access to your money.

That's why an account-based pension combined with a lifetime annuity can provide the best of both worlds - income for life plus flexible access to super savings.

Lifetime annuities have evolved

Lifetime annuities, which are offered by some super funds as well as leading life insurance companies like Generation Life, have come a long way in recent years.

Every lifetime annuity now pays a death benefit - either passing on the income stream to a spouse or paying a lump sum to other beneficiaries.

More recently, we've seen the rise of investment-linked lifetime annuities. These still offer income for life but have the added opportunity of the investment growing over time depending on the chosen investment options.

More bang for your super buck

If you're in or near retirement, it's worth taking a fresh look at lifetime annuities.

Coupled with an account-based pension, annuities can give you the confidence to embrace a rewarding lifestyle without regrets about missing out on everything retirement has to offer.

What to read next

• Smart EOFY tax moves investors can still make
• The hidden money strain for women carers
• How to embrace the start of the financial year

Reader question

Hi Paul, I've been reading Money since I was a uni student with a hundred dollars to my name. I learn something from every issue and it keeps me focused on my finances, so thanks to you and the Money team.

I'm now in my 40s and my wife and I have paid off our home.

With no mortgage to pay anymore, we have been investing our surplus cash into broad-based index funds and have accumulated a portfolio of about $300,000 outside super (our combined super balance is also about $300,000). We have two children and live a modest lifestyle to maximise savings.

We would like the option to 'retire' in about 10 years and will likely become carers for elderly parents. We are torn between the best option for us financially. Would it make more sense to:
1.  Stop investing in shares outside super and buy an investment property?
2.  Access some of the equity in our family home to buy additional shares/index funds?
3.  Continue to do what we are doing and build our share portfolio?

I know our current path is the least risky, as we have no debt, but part of me thinks I should be leveraged a little more with a 10-year timeframe ahead. - Aaron

Paul's response

I'm feeling very old, Aaron. But also honoured that you have been following Money for so long.

This is the second letter, recently, from a Money reader who has also paid off their house at 40 (Paul's Verdict, February issue).

Some of my favourite moments come from those who have followed my key advice to pay extra into their mortgage. I was saying this on radio in the early 1980s, my Money TV show in the 1990s and Money magazine from 1999.

In particular in the '80s, few really understood compound interest and the value of just a few extra dollars into a mortgage each week.

I feel really pleased when someone tells me they paid their mortgage off years or decades early due to this advice. Paying a house off is such a simple idea, but where I hope we have helped a bit with Money is to constantly reinforce the principles of wealth creation.

Paying off a home is a 'genius' strategy. It literally locks in a path to financial independence, as you are demonstrating. Once achieved this allows you to make life choices, such as early retirement, and in your case the ability to play a vital and loving role as careers for your parents. So what's next for you?

I agree that at age 40, with a strong savings history, your $300,000 in super and $300,000 invested outside of super, some gearing is a good idea with your 10-year view. You have already noted your current path is the least risky. I support being "leveraged a little more", as you say.

In your situation, you can manage risk with time. It is hard to move away from the historical fact that in a world with growing population numbers, good quality assets such as property and shares are likely to show good long-term returns.

Yes, we will get downturns and these can be large. Our friend history shows, though, that prices recover.

Those who lose through gearing are forced to sell in bad times, usually at a big loss. If you choose to gear, we must eliminate the forced sale risk. This means you do not borrow money where you cannot afford to service the repayments.

Obviously, you also have your safety pot of investments outside super. In terms of shares or property, I am neutral. You own property in your home and shares inside and outside super.

Let's look at these asset classes through the 'sleep at night' lens. In a downturn, which asset are you more comfortable with, property or shares?

Technically, shares are a much easier option and after all costs, a higher performing investment. The problem, of course, is when our property goes backwards, we would struggle to sell in a downturn and we don't see or know its value every day.

In summary, I agree with a 10-year gearing strategy into quality shares or a well-located property. The scale of gearing should reflect your situation. Don't over-gear. I think it is sensible to go with either of these proven asset classes, based on your preference.

Energy supply risks and regional instability have caused significant market volatility.

The reason this is a very significant global issue is because energy is a key input to all sectors across the economy, and no sector is immune from its effects.

For investors, this is a timely reminder that the key principles, like diversification and horizon-based planning, matter more when the geopolitics are consistently in the headlines.

And the good news? Staying disciplined can help mitigate uncertainty and protect holdings and potential allocations from significant downside risk.

Immediate market shocks take hold

Markets reacted swiftly. Oil prices spiked on fears of disrupted supply, pushing energy stocks higher while broader equity indices dipped amid inflation worries.

This comes at a time when up until recently, markets valuations are at all-time highs. Safe-haven assets-gold, the US dollar, and longer-dated government bonds-saw inflows as investors shifted away from riskier exposures.

Asian and European markets have felt the 'pinch' harder due to their higher energy dependence.

There is ongoing uncertainty as to how long the conflict might play out, what implications there are for global supply chains, and indeed potential inflationary pressures that ripple across global economies.

Central banks are having to make additional and complex judgment calls on their monetary policy settings. This in turn has ramifications for economic growth, in the form of a likely slowdown, likely-higher domestic interest rates, and relative currency valuations.

These added complexities might be perceived as a sudden extra 'tax' on everything, for instance, increased fuel and freight costs.

It could also be taken as a sign that the traditional correlations between the asset classes are breaking down in the short term and becoming less uniform, thus departing from long-evident historical patterns.

Diversification's critical role

Against this backdrop, diversification isn't just textbook advice-it's an investors' primary defence.

Spreading investment exposures across asset classes, regions, and industry sectors helps to lessen the impacts of sudden (adverse) volatility when one investment driver, such as energy, becomes a 'flashpoint'.

For example, a portfolio invested heavily in US tech (which is increasingly reliant on energy to power AI) or oil-dependent emerging markets, might suffer disproportionately; whereas an investment strategy balanced across commodities, quality government bonds, and other non-correlated alternatives may well be less sensitive to exogenous shocks like war and supply-chain bottlenecks.

Portfolio rebalancing at regular intervals can help prevents drifts in asset allocation exposures, and low-cost ETFs help make this process of adjustment easier than ever.

Yet, chasing 'hot' war stocks after the fact rarely pays off-markets have already priced in future expectations regarding valuations very quickly. However, the timeless truth remains: While diversification doesn't eliminate portfolio losses, it does help keep them insulated from large drawdowns overall.

Making life-stage adjustments

This brings us to an important evaluation when implementing an investment approach. Your stage in life should shape how you might respond to critical moments over the (long) investment horizon.

Younger investors (typically in their 20s-40s), and still in accumulation mode, tend to have higher exposures to equities and are more likely to see volatility as a buying opportunity. Long time horizons provide a greater means to benefit from the multi-decade investment cycle.

Mid-stage investors (40s-60s) need more balance and flexibility, and a lower allocation to growth-oriented and volatile asset classes, compared with a younger cohort

For pre-retirees and retirees (60s and over), asset preservation is usually the main priority. They tend to place an emphasis on cash buffers (highly liquid assets), high-quality bonds, and stable income sources to help avoid sequence-of-returns risk. Hence, a diversified, conservative mix of assets helps to meet this investor group's lifestyle needs.

While the commentary above are only generalised guidelines, all investors should consider their own needs, and preferably consult a licensed financial adviser.

Summary

The Iran conflict underscores a core reality: Geopolitics will always create noise, but sound investment principles endure.

Stay diversified, align with your life stage, and maintain a long-term investment horizon. And seeking quality investment advice from a licenced financial adviser could make all the difference.

A national survey conducted by YouGov found around one in four Gen Z Australians owns crypto; 66% say they take a speculative approach to at least some of their crypto investments.

Twenty-four percent of Gen Z crypto investors report trying to pick a winner by buying the latest new 'coins' and 15% say they invest just for a 'bit of a punt'. They also reported being contacted about crypto investing, with men being contacted more often than women.

"Short-term or speculative trading based on what's popular online carries real risks, particularly in volatile markets like crypto," says ASIC commissioner Alan Kirkland.

Social media, one of the main sources of information for the 18 to 28 age demographic, is also a major distributor for crypto marketing. Almost three-quarters of Gen Z have seen crypto ads on social media.

Sixty-three percent of Gen Z respondents say they use social media for financial information and guidance, while 30% use YouTube and 18% use AI platforms.

More than half of Gen Z say they somewhat or completely trust financial information on social media and from 'finfluencers', while 64% trusted AI platforms.

The regulator urged Gen Z Australians to complement the information they seek from influencers and content with reputable and evidence-based sources.

ASIC warned relying on a narrow range of sources, particularly unverified or promotional content, can increase financial risk, especially in an environment where markets and online trends move quickly and information is rarely tailored to individual circumstances.

At the same time, ASIC has refreshed the Moneysmart website, its consumer education platform, to make it more engaging and relevant for Australians of all generations.

"This refresh helps ensure Moneysmart provides a trusted alternative - free, independent and designed to help young Australians make decisions that work for them, not someone selling a product," says ASIC.

It comes as the Ecstra Foundation notes a decline in financial literacy has meant young people enter adulthood without the skills they need to manage money, avoid scams and navigate an increasingly complex financial system.

Its program, Talk Money, recently introduced a workshop called Becoming Scam Savvy, designed to help high school students recognise scams and stay safe online.

Ecstra Foundation chief executive Caroline Stewart says: "Financial education goes far beyond understanding money. It's about building the confidence, habits and practical life skills young people need to make good financial decisions throughout their lives."

This article first appeared on Financial Standard

According to HLB Mann Judd's latest IPO Watch report, the ASX recorded 35 new listings in 2025, up from 29 in 2024 and 32 in 2023, but still well below the long-run annual average of 83.

The firm says there are early signs this year could be stronger, even if activity remains patchy for now.

"The pipeline remains soft," says Simon James, partner at HLB Mann Judd Sydney, "but several high-profile names have signalled an intention to float later in the year."

For everyday investors, IPOs can be exciting. They offer a chance to buy into a company when it first lists on the sharemarket. But they also come with hype, uncertainty and plenty of risk.

Why companies list on the sharemarket

An IPO is when a private company lists on the sharemarket and sells shares to investors for the first time.

At its core, the process is about raising money. That capital might be used to fund growth, expand into new markets, develop projects, pay down debt or strengthen the balance sheet.

In some cases, it also lets founders, private equity backers or early investors sell down part of their stake.

One example of an upcoming IPO is 49 Metals, a gold explorer pursuing ASX plans this year.

The company is seeking to raise $10 million to advance projects in Nevada in the US. According to reporting on the offer, it plans to issue 50 million shares at 20 cents apiece.

In its prospectus - a legally required document that functions as a pitch to investors - the company will offer 50 million shares at $0.20 each to raise the amount.

"I look forward to you joining us as a Shareholder and sharing in what we believe are exciting and prospective times ahead for the Company," said Richard Pearce, a non-executive chairman at 49 Metals in the document.

What new listings are in the IPO pipeline?

Including 49 Metals, the ASX's upcoming floats and listings page shows only a handful of near-term deals, a sign the market is still cautious.

One of them, Kapstream Investment Trust, is structured as a listed investment trust (LIT) - investors buy units in a closed-end trust that invests in a managed fixed-income/private-credit portfolio, and those units then trade on ASX like shares.

The other entries are traditional IPOs, where investors buy shares in a company at an offer price.

All of these near-term floats sit in materials - four gold-focused explorers and one uranium name - extending last year's pattern of resources dominating the tape.

Brad McVeigh, HLB Mann Judd partner in corporate and audit services in Perth, says that in contrast to the broader market, resources listings have been "red hot."

Materials accounted for around 63% of all listings in 2025.

"There were a number of instances of companies launching capital raises and closing the book just an hour later due to overwhelming demand."

McVeigh says the optimism should continue in 2026: "With a supportive equities market and clear drivers of demand, the resources sector appears set for a period of sustained activity."

ASX IPO rumours in 2026

It is not just miners that could test the market this year.

Koala appears to be one of the more advanced non-resources candidates. Recent reports say the furniture brand is targeting an April 2026 ASX listing, seeking about $70 million at a valuation of roughly $300 million to $305 million.

It joins competitor Amart Furniture, which has flirted with the idea of listing on the ASX after chalking over $1 billion in annual sales. It is set to join its other home retailer competitors such as Nick Scali, Adair and Temple and Webster on the exchange.

Pet supply company Greencross has also been widely tipped as a possible candidate, although some recent reports suggest its IPO plans may be on hold.

That is a useful reminder for investors: until a prospectus is lodged and a timetable is locked in, an IPO is still only a possibility.

Tech company IPOs to break records

Technology is still setting the tone for valuations and fuelling speculation about who lists next.

Rokt, the Australian-founded e-commerce software firm, is again eyeing public markets. Recent reports put its valuation around US$7.2 billion, and it has explored a dual listing that could see shares trade on both the ASX and Nasdaq.

Sharon AI has opted for that offshore-first route: it listed on Nasdaq in February, raising about US$125 million to fund its AI cloud infrastructure, and has flagged an ASX secondary listing by April.

Rival Firmus Technologies is also closing in on an ASX listing mid-year, after securing a US$10 billion Blackstone- and Coatue-led debt facility to build out "AI factories" across Australia.

In sadder news for the local market, Aussie tech darling and design platform Canva is expected to launch on US markets. Valuations are estimated at around $65 billion, with investors expecting a 2026 timetable.

Even so, these mooted local floats and Aussie projects sit alongside a much larger US-led IPO watchlist.

Anthropic (maker of Claude) has just raised US$30 billion at a US$380 billion valuation and is widely tipped to pursue a 2026 IPO.

Its competitor, OpenAI, maker of ChatGPT, was valued at US$500 billion last October and has been linked to additional fundraising that could push its private valuation higher ahead of a possible late-2026 listing.

And at the top end, SpaceX is reported to be weighing a 2026 IPO at roughly US$1.5 trillion, a record-scale listing if it proceeds.

Should investors rush in?

Not necessarily. IPOs can offer the appeal of getting in early, but they do not always deliver quick gains. Some list strongly and then fade. Others disappoint from day one.

Unlike established listed companies, new floats often have a shorter track record in public markets and less information for retail investors to work with.

Simon James says investors should be careful of the IPO whispers as there's an "element of sales and marketing" to them.

"I'd be looking for the whispers that are actually tied into proper business plans and money being raised for the right reasons as opposed to hype around company names," he says on a recent Friends with Money podcast.

"Anyone investing in any stock should understand the business model and what it's trying to achieve. Is it hitting its milestones or not? Just go onto the ASX website to upcoming listings where all the prospectuses and information are readily available."

Reader question

Hi Paul,

I recently turned 75 so I have a short window in which to add to my super.

I have $139,000 in super and will add another $300,000 when I sell my house, I guess that will be in the next two to three years.

My question is that I have $20,000 and would like to know whether I should add this to super or buy more CSL shares, which I believe will rise again.

Any thoughts appreciated. Thank you. - Judie

Paul's response

We'd better start with one of my money stories, Judie. My dad was a doctor in the NSW country town of Griffith. As a doctor, he understood the value of blood plasma.

Back then Griffith also had a CSIRO centre, so when CSL was floated on the stock exchange out of the CSIRO, he bought $2000 of them. Money was never a big deal for Dad. He worked as a GP until he was 81, owned a modest home in Griffith and a basic car.

His big expense for the week was his Rotary Club dinner at a local club on a Tuesday night, but investment interested him and he enjoyed his share portfolio, which passed to me and my sister after our parents passed away.

This included the CSL shares. After various share splits, we had quite a few, each with a cost base of less than $1 a share.

I appreciate CSL has fallen dramatically from its peak of around $330 a share to about $180 a share today, but I share your positive view of the company. So do most analysts - and it has an average price target of $230. But I won't be buying any more.

I already hold my dad's shares (which we would like to pass to our children). I believe in diversification, and I am already 'overweight' CSL shares.

CSL is about 5% of our market and more than 5% of my share portfolio, so I have enough regardless of the price! Whether you put your $20,000 into super or CSL is very dependent upon this. You may be happy to hold a high percentage in CSL, which is fine, as long as you understand the risks in focusing on a single share or small group of shares.

A bonus of super is that you get automatic diversification and, over the longer term, pretty predictable returns.

In particular, with $300,000 from the sale of your house going into super, I am relaxed about the decision you make regarding adding $20,000 to CSL or super.

As you can see, I have an emotional attachment to CSL but given its significant price drop and the quality of the company, investing more into it is not likely to be a bad decision.

What to read next

• Diversification: Why you shouldn't put all your eggs in one basket
• What are franking credits and why do they matter?
• The hidden tax perks that boost your super balance
• How much super you need for a comfortable retirement now
• Here's how to get free advice from your super fund

The importance of diversification is one of the first lessons investors learn. It has been called the 'only free lunch' in investing. However, over-diversification can lead to diluted returns.

There must be a balance between diversification and concentration risk. Concentration risk is the equivalent of putting too many of your eggs in one basket.

As Australians, many of us are too concentrated in the local market. Exacerbating this risk, the Australian stockmarket is concentrated on two main industries - financial services and mining.

Further, we derive income from the Australian economy. All of a sudden, we have most of our super and investments in the Australian economy and our income is derived from the Australian economy.

This is one example of concentration risk. Other examples would be concentrating your investments in one particular manager or in one investment, such as a house. It is an understatement to say that Australians are obsessed with property. Houses come up whenever investing and personal finance are discussed.

Affordability, the best places to buy and how to get into the market are common themes.

Many Australians' wealth is concentrated in the illiquid asset that is their primary place of residence, and according to the Australian Taxation Office more than two million of us have further concentrated our wealth through investment properties.

A survey commissioned by Raiz Invest in 2019 suggests that Australians have no problem with this: 53% of participants don't believe cash is the safest place to invest money and 22% believe property is the safest investment. Whichever assets you hold, concentration is a risk for investors to manage.

How to judge the right level of concentration for your goals

One of the main questions to ask: What is the balance between concentration and diversification?

How many shares should I have in my portfolio? Investors need to ask themselves, if the value of any investment or security dropped to zero, would it prevent me from reaching my goals?

This is the risk you need to balance. Many financial commentators and professionals see 12 to 18 stocks as a safe number because it diversifies the risk while maintaining enough concentration for each holding to have a decent impact on returns.

Practical steps to building a portfolio An academic example of a diversified portfolio will always contain a mix of many asset classes - cash, international and domestic fixed income, alternatives, international and domestic equities.

Gold, crypto and commodities might be added to the mix. You can always find an argument to add another asset class in the interests of diversification. In reality, such a complicated mix is often not necessary.

What a diversified portfolio can look like in practice

Diversification is the process of removing single-security risk from a portfolio. Once that is accomplished, many investors pick and choose which asset classes and investments will best help them reach their goal.

The goal of removing single-security risk is not the justification you often hear for diversification.

Instead, many in the investment industry like to talk about buying uncorrelated assets - that is to say, assets whose values don't move in lockstep. Taken to the extreme, holding negatively correlated assets means prices move in opposite directions.

The reason the investment industry talks up uncorrelated assets goes back to the idea that volatility is synonymous with risk. Uncorrelated assets lower volatility in a portfolio; a negatively correlated asset acts as a hedge.

There may be very specific reasons why an investor would want to lower the volatility of a portfolio or hedge it. It shouldn't be the default move, however. Remember, it is important to avoid the mindset that says being a great investor involves holding a complex portfolio. Being a great investor means you accomplish your goals.

You don't lose any points for doing that in the simplest and safest way possible. We think the benefits of simplicity outweigh those of complexity.

Keeping track of a complex portfolio is time-consuming and rebalancing a complex portfolio can be difficult. Adding new contributions to your portfolio can be challenging as your holdings grow since you will need to decide where to funnel new savings.

As we've reiterated, most investors lower their returns by trading too much. More holdings increase the temptation to tinker, risking your goals.

Why simplicity often beats complexity in real portfolios

Research from Morningstar shows that portfolio diversification doesn't have to be complicated. A simulation with a basic mix of 60% stocks and 40% investment-grade bonds was compared with a portfolio that held 11 different asset classes.

The more complex portfolio was made up of 20% large-cap domestic shares, 10% developed and emerging markets stocks, government bonds, US core bonds, global bonds and high-yield bonds, and 5% each in small-cap stocks, commodities, gold and real estate investment trusts (REITs).

Although the more diversified portfolio outperformed at times, the 60/40 mix provided better risk-adjusted returns in about 87% of the rolling 10-year periods since 1976. This is great news because it means you don't have to overcomplicate your portfolio. It doesn't take much to achieve the right mix with adequate diversification.

Your job is to find investments that will help you meet the return and asset-allocation requirements that will achieve your goal. Your investment strategy will include security-selection criteria that provide a framework for picking from the thousands of available investment options.

How many ETFs and funds make sense for most investors

One of the most common questions we get is about quantity. How many stocks should I have in my portfolio? How many ETFs? How many funds? Let's start with ETFs and managed funds.

A simple portfolio involves a single ETF for each asset class to which you want exposure. For most investors shares and a single defensive asset class such as bonds or cash will probably suffice. Australian investors will typically want one ETF for Australian shares and one for global shares plus a defensive asset class.

An army of investors termed Bogleheads follow the advice of Vanguard founder John Bogle. He advocated for the simplicity of a three-ETF portfolio for the reasons we've outlined.

A portfolio needn't be limited to just three ETFs but as an investor you should consider seriously the justification for adding any and every additional holding.

It may make sense to do so based on your goals and investment strategy. Just be sure there is a high hurdle for including asset classes such as emerging markets, small-cap shares, a thematic or factor ETF or any of the countless other offerings.

How to pick shares that actually diversify your risk

When it comes to equities, there are many professional investors and financial firms that provide guidance on how many shares are adequate for diversifying away risk.

The number ranges from 12 to 30 but the number alone, without context, is meaningless. It's the shares themselves that matter - the sectors, industries, geography.

Consider this when picking the shares in your portfolio, especially in Australia with its concentration in the two industries of mining and financial services. Because Australian investors have a great sense of home bias - they like to focus on Australia - many of them are invested in one geography and mostly across two industries.

To sum up, don't overcomplicate your portfolio and do have your investments directly connected to the goals of your portfolio. You don't need a stake in every single asset class to be diversified.

Exercise: set diversification rules that fit your goals

You are on the pathway to a personalised investment strategy based on your goals. As part of your strategy, you will establish rules around diversification.

A precursor is framing diversification around the goals you have already defined.

Start with asset classes

Think through which asset classes you want in your portfolio and why.

We suggest you start high level and consider global and Australian shares, global and Australian bonds, global and Australian listed property and cash. You shouldn't just own something for the sake of owning something. Look at the returns in different asset classes over the long term and compare them with the returns you need to achieve your goal.

Think about the role you want an asset class to play in your portfolio

Consider whether other options would achieve the same end, especially if they are cheaper to access or work better with the other assets in your portfolio.

Write down which asset classes you will consider and which you won't, along with your rationale for these choices. This will be an input into setting your asset allocation as part of your investment strategy.

Consider the individual holdings in your portfolio

If you use or plan to use funds or ETFs in your portfolio, this step is less critical. Funds and ETFs are already diversified, so you don't need to set a specific rule around holdings. It is perfectly reasonable to include one ETF or fund per asset class in your portfolio. If you hold or plan to hold individual shares, there are other considerations.

Think through position sizing or the percentage of your total portfolio that each share can make up.

The risk you are trying to diversify away is that of not achieving your goal. Use that as the basis for your decision making. If a position that makes up 5% of your portfolio were to go to zero, could you still achieve your goal? If not, that holding is too large.

One trick to help you as you complete this exercise is to go back to the calculation of your required rate of return.

Reduce your portfolio

Don't change any of the other variables but reduce your current portfolio size by different amounts that represent size limits of a position. How much would it change your required rate of return if you were to reduce your current portfolio by 5%?

Could you make up for this change by saving more money to maintain the current required rate of return? You don't need an exact number. Aim for a comfortable range for an individual share as a percentage of your portfolio while protecting your goal from a catastrophic loss.

Write down the range for each position and your rationale for selecting it

This will be an input later. Finally, consider any other aspects of your goal that may influence diversification.

For instance, if you are an income investor you may want to limit the amount of income that comes from any one share. Think through any other components of diversification that are related to your individual goal.

This is an edited excerpt of Invest Your Way by Mark LaMonica and Shani Jayamanne. Enter now for your chance to win a free copy!