Investing

Should The RBA raise rates to prepare housholds for highre global rates

Should The RBA raise rates to prepare housholds for highre global rates

And so it’s been this week with a former RBA Board member arguing that the RBA should raise rates by 0.25% to prepare households for higher global interest rates and that the RBA should consider ditching its inflation target in favour of targeting nominal growth.

Asset Allocation & Market Pull Back

Asset Allocation & Market Pull Back

“The probability of loss in all Australian Equities is 28% with a frequency of negative returns (years) 3.6 ”

“In the short run, the market is a voting machine but in the long run, it is a weighting machine”

2017 Long-term Investing Report

2017 Long-term Investing Report

1. Rear-view mirror investing
Making investment decisions based on past performance is a high-risk strategy at the best of times, and we never recommend it.

2. Lack of portfolio diversification

As this Report shows, all asset classes are vulnerable to the vagaries of the market. Having a narrowly
focused portfolio by putting all your eggs in one or two asset classes exposes investors to a lot of
unnecessary downside risk.

3. Reliance on residential property

The only way to avoid the considerable downside risk of single-asset investing is true diversification across asset types.

4. Investing in over-priced traditional assets

The potential benefits of greater diversification and active management become all the more meaningful the lower the expected market returns.

5. Setting and forgetting

Instead of a ‘set and forget’ approach which relies on a steady-state, unchanging market environment,
investors faced with volatile markets will require a nimble approach, shifting between asset classes and sub-asset classes in real time as market conditions change.