A prudent investor can use volatility in markets to their advantage. By spreading their investment in set proportions across a range of different asset classes (such as cash, fixed interest, Australian shares, international shares and property) they can re-balance their portfolio when markets move. This approach to investment is called using a “strategic asset allocation”. For example, consider a portfolio with a spread of investments across the asset classes mentioned above. If the Australian share market was to fall by 30% (this is what happened in March 2020), then the investor could at that time move some money from fixed interest and cash into shares to rebalance the portfolio back to their original asset spread. Then, when the share market inevitably recovers, they can again review their portfolio to sell down their now overweight position in shares and place the money back into fixed interest and cash. #Hewison #FutureThinking #Investments #markets #volatility Disclaimer: Any information, financial product or advice provided in this post is general in nature. It does not take into account your needs, financial situation or objectives. Before acting on the advice, you should consider whether it is appropriate to you in light of your needs, financial situation and objectives.
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Specialist Wealth Management Advisor | Certified Financial Planner® | Personal Wealth | Superannuation
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