INVESTING

Gold, silver and bronze: your Olympic investing strategy

By

The 2016 Rio Olympics are off to a flying start, along with Australia's spot on the medal tally.

Many of us eagerly anticipate this event - one of the truly global sporting spectacles - after a four-year wait between laps.

But as we bask in week one of Olympic fever and we limber up for some armchair sprinting, it might be time to ask ourselves if our investment portfolio is in peak condition.

olympics

The Reserve Bank this month dropped the official cash rate by 0.25% to 1.5%, a new low. This low-rate environment is the ideal time to review your investments to ensure you're on a winning streak.

Just as elite athletes review their preparation to ensure they're on track to achieve their goals, investors should also monitor their portfolio to ensure they are fully fit for achieving their lifestyle and retirement objectives.

If you're invested in cash but your goal is to achieve a consistent level of income, then you may find this latest rate cut puts you off the pace. You may want to consider whether a revised investment strategy may be better tuned to the current environment.

In the spirit of the 2016 Rio Olympics, we have identified three investments that may help investors get to the finish line more efficiently.

They should also consider whether they need to call on the expertise of a coach. Otherwise known as a financial adviser, this will help them identify a strategy that will best suit their situation and help them deal with any setbacks along the course.

Gold: Multi-asset investments

We've awarded multi-asset investments the gold medal. They work on the premise that risk can be reduced by combining asset classes that have a low correlation with each other.

Investing in assets that are influenced by different return drivers, or which access unique sources of return, can further enhance the degree of diversification in a portfolio.

The funds also have a flexible game plan that can work in different match conditions. Multi-asset funds are designed to deliver steady returns, growing faster than the cost of living while protecting against market volatility. They are particularly suited to retirees who don't have the capacity to experience a sharp decline in wealth.

Silver: Infrastructure

Taking silver is infrastructure. It offers investors the opportunity to own the utilities and facilities that provide essential services and help drive economic growth and productivity.

From an investment perspective, direct infrastructure typically performs well in volatile and uncertain markets while listed infrastructure offers investors liquidity. Investors in the asset class benefit from attractive risk-adjusted returns, reliable inflation-linked income, stable long-term yields with the potential for capital growth, and defensive characteristics emanating from the provision of essential services.

Bronze: Australian equities

And in third place, taking the bronze medal, are Australian equities. They offer the potential to provide higher returns over the long term as well as attractive income through dividends that provide additional tax advantages.

This is beneficial for investors looking for income that grows over time to help meet their essential living needs.

Investing in an Australian equities income-focused managed fund may appeal to investors with a preference for a higher, more consistent income stream and a lower tolerance for capital volatility than they would achieve by investing in the broader equity market.

So as we enter the 2016 Rio Olympics and watch many of our favourite sporting greats break records and enter the history books, it might be time to think about smashing your own financial goals.

It might not win you Olympic glory but it might just set your investment portfolio on the path to strong returns and ensure you achieve your own personal best.

RELATED STORIES

Post a comment
Link to something 9zmdN7FF