Wealth Building

If you’re just starting out as an investor, there’s a lot of information to absorb.

When creating a financial plan, we use a number of factors to determine which combination of asset classes will work best for you. These factors include your attitude to risk, your investment time frame and your financial and lifestyle goals. The end result or how your money is invested across the different asset classes, is known as your ‘asset allocation’.

Cash, fixed interest, property and shares are the four main asset classes. Defensive investments include cash and fixed interest. Growth investments include property, shares and alternatives. Generally the higher the return, the higher the risk. Diversifying your portfolio and investing over the long term can help reduce this risk.

If you’re just starting out as an investor, there’s a lot of information to absorb.

Which asset classes are best for you?

For example, if you are a risk-averse investor looking for stable returns or wanting a low-risk, short-term investment option for a sum of money (eg a home deposit) – we would probably weight your asset allocation more heavily towards defensive investments such as cash and fixed interest.

On the other hand, if you are comfortable with short-term fluctuations in the value of your investments and want to invest for more than five years, growth investments such as Australian and international shares may be the best option for you.If you are concerned that your asset allocation does not match your investment goals or attitude to risk, it’s important to review your financial plan. We can adjust your asset allocation as required to help you achieve the best possible results.