April 26, 2017

Practical ways to control portfolio drift

Sticking to a disciplined strategy of regularly rebalancing a portfolio back to its target asset allocation can often seem counter-intuitive. This includes in the prevailing low-interest investment environment with expectations for lower returns over the medium-to-long term for broadly-diversified portfolios. In short, portfolio rebalancing can be an emotional decision for investors, requiring the selling of currently outperforming assets to buy currently underperforming assets. The basic reasoning behind periodically rebalancing is to recapture a portfolio’s intended risk-and-return characteristics. We have recently discussed how a broadly-diversified portfolio’s asset allocation is the primary driver of its return variability over time and how a portfolio […]
April 19, 2017

Life’s financial turning points: good and not-so-good

The marriage and divorce statistics for 2015 sadly suggest that 43 per cent of Australian marriages may end in divorce. Significantly, this number-crunching does not include separations of de facto couples. Unfortunately, the breakdown of a relationship is a reality for many couples and it is a reality with typically damaging financial and emotional consequences. We face a series of widely-shared financial turning points during our lives. Yet how we handle them obviously differs widely. ASIC’s personal finance website MoneySmart has long published a comprehensive feature, Life’s events – last updated this month – with tips about how to deal […]
April 19, 2017

All-terrain motoring, all-terrain portfolios

More of us are equipped for all-terrain motoring but how ready are you for all-terrain investing? Australians bought more new sports utility vehicles (SUVs) than passenger cars in February for the first time in any month on record, according to the Federal Chamber of Automotive Industries. More than 35,000 SUVs were sold in that month. Just as we hopefully select our next cars on the basis of being fit for their intended purpose – although countless SUVs apparently never leave the bitumen – we hopefully take the same approach when creating our investment portfolios. A robust, all-terrain portfolio could be […]