When markets are uncertain, it can be difficult to know whether to focus on growing your investments or protecting what you already have.

A well-structured portfolio can help you do both.

Finding the Right Balance

  • A balanced portfolio isn’t just about having lots of different investments. It’s about understanding what role each investment plays.
  • Depending on your age, goals and circumstances, you may want more growth or greater protection.
  • Combining growth investments with defensive assets can help reduce the impact of market downturns.

Growth Assets

  • Growth investments can include shares, property, private equity and investments linked to long-term trends such as healthcare, energy and technology.
  • These investments can provide greater growth potential, but they also come with greater market volatility.
  • When markets fall, it’s important to avoid making rushed decisions that could lock in losses.

Defensive Assets

  • Defensive investments are generally used to provide greater stability and protect capital when markets are falling.
  • These can include:
  1. Cash.
  2. Government and high-quality bonds.
  3. Defensive shares such as healthcare and utilities.
  4. Infrastructure.
  • Holding a combination of growth and defensive investments can help create a portfolio that is better prepared for different market conditions.

Protecting Against Inflation

  • Inflation can reduce the purchasing power of your money over time.
  • Assets such as property, infrastructure and commodities may provide some protection because their value can rise as the cost-of-living increases.
  • Inflation-linked bonds are another option designed to provide protection when prices rise.

Investing Overseas

  • If you invest internationally, changes in the Australian dollar can affect your returns.
  • Currency exposure can sometimes help protect your portfolio when global markets fall, but it can also create additional volatility.
  • The right approach will depend on your investments and circumstances.

In summary, protecting and growing your wealth can involve:

  1. Balancing growth and defensive assets.
  2. Diversifying your investments.
  3. Protecting against inflation.
  4. Managing international currency exposure.
  5. Keeping enough cash available for short-term needs.

Markets will always experience periods of uncertainty. Having a well-diversified investment strategy can help you stay focused on your longer-term goals.

Want to review your investment portfolio?

We’re here to help. Talk to us about whether your current investments provide the right balance between growth and protection.

Important Notice:

The information contained in this article is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for your circumstances before acting on it and seek advice from a qualified professional.

Personal financial advice can only be provided after considering your individual circumstances and providing the appropriate disclosure documentation. VJC Wealth accepts no liability to any party for any loss arising from reliance on this information unless it has been provided as part of a formal advice engagement.