Not having enough time can be dire to your finances
When we put together your financial plan, we start with your goals. What financial goals do you have? What lifestyle goals and family goals do you have? It is from this point that we work how we achieve these goals and what tools do we have available to us.
An investment portfolio is an important tool – used to fund your goal. When we put together a tailored portfolio, we spend time to make a portfolio that will help you reach your goal. But just as importantly, one you are comfortable with.
Your Time Horizon
Working out your time horizon is an integral part of putting together the investment portfolio. That is how long until you wish to reach your goal ?
Are you 10 years from retirement? Are you looking to buy a house in 5 years? Do you kids go to high school in 3 years?
The shorter your time horizon, the less time your portfolio has to recover from any short term ‘noise’ in the market.
Once your portfolio is in place, it is important to keep in mind the length of your investment. Markets will go up and down in the short term. As can be seen by the following chart produced by Onepath.1
What we can see from this is that there are event driven corrections in the market. We can also see that with any event, it takes time for assets to recover.
As Fidelity’s Anthony Doyle sets out in his article:
“ an analysis of daily returns of the All Ords index since 1979 suggests shows that 100% of investment periods greater than 10 years had appreciated in value. ” 2
By selling out of your investment during downturns, you crystialise your losses and only run the risk of missing out on the market recovery
Review your Financial Situation
Understanding your own investment horizon is important to allow investment strategies to play out. If at any time you feel uncomfortable with the level of movements in your investments, you may need to discuss this with a financial adviser to confirm your portfolio is right for you.
It is natural to feel uneasy when your portfolio value drops. This is why we spend time with you to understand how comfortable you are with the ups and downs in the market.
If you would like to discuss your investment portfolio with us, or discuss your risk profile – Schedule a no-cost, no-obligation Discovery Meeting with Louella Jorge.
Discovery Wealth – The Hills trusted name in financial advice.
1. Timeframe: 31 December 1982 to 31 December 2019. Annual returns are calculated on December year end.
Source: www.marketindex.com.au, FactSet, ABS and OnePath.
Note: Past performance is not indicative of future performance. Your investment is subject to investment risk, including possible repayment delays and loss of income and capital invested. Any case study is shown for illustrative purposes only and is not a prediction of the actual outcomes you will achieve. Listed real assets and international fixed interest are not included in the graph above because data is not available from 1983.
Data: Australian shares: S&P/ASX 300 Total Return Index | International shares: MSCI World (ex Aust) Net Total Return Index in AUD | International listed property trusts: FTSE EPRA NAREIT (ex Aust) Total Return Index hedged to AUD | Australian fixed interest: Bloomberg AusBond Composite 0+ Years | International fixed interest: Bloomberg Barclays Global Aggregate hedged in AUD | Cash: Bloomberg Ausbond Bank Bill Index | Inflation: Consumer Price Index.
2. A Doyle – Why Investment Time Horizons matter [sept 2019] available online https://www.fidelity.com.au/insights/investment-articles/why-investment-time-horizons-matter/
This information is issued by OnePath Funds Management Limited ABN 21 003 002 800, AFSL 238342. This material is current as at March 2020 but may be subject to change. The information provided is of a general nature only and does not take into account your personal needs, financial circumstances or objectives. Before acting on this information, you should consider the appropriateness of the information, having regard to your personal needs, financial situation and objectives. You should read the relevant Product Disclosure Statement (PDS) available at onepath.com.au and consider whether a particular product is right for you before making an investment decision.
The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. Louella Jorge is an Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429. This editorial does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information, you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser before you act.