New (financial) year’s resolutions

BY Tania Smyth | 20 June 2017
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New Financial Year

It’s that time of year again to start making some financial resolutions and review your portfolio. Last year, we were addressing some portfolio ideas in light of the volatility in markets.  As I write this year, by contrast, volatility in markets is at multi-year lows (over 50% lower than this time last year). So like all New Year’s resolutions, some are the same as last year (which usually means we didn’t stick to them!) and there are new ones in light of changing circumstances.  Of course, your own personal financial resolutions will depend on your investment objectives, but here are some ideas to spark some thought.

Lose weight, improve balance, get fit – This remains a perennial annual resolution for our portfolios. Now may be an opportune time to review your portfolio and trim some “fat” in any overweight asset classes. This kind of ‘bulge’ could have occurred as a result of outperformance in a specific asset class, or more simply if your investment portfolio is not particularly well balanced or diversified. Diversification is key to keeping your portfolio ‘fit’ through the investment cycle. Just as doing push-ups only would not generally be enough to improve your overall fitness, the same applies with investments. No one asset class consistently outperforms. Improve your portfolio’s overall fitness with diversification (see our post on asset allocation).  A broad range of asset class exposures, including domestic and global equities, cash and fixed interest, commodities and currencies, to name a few, are available via ETFs, which can be simply traded on the ASX.

Travel – This resolution is equally worth revisiting, as most Australian investors have a natural ‘home market bias’ and you may find more fruitful opportunities abroad. If you agree, then it’s time for your investment portfolio to travel. International Equity ETFs had the strongest inflows in the Australian ETF market for 2016 and to date continue to have high inflows. In fact, a large number of ETFs launched in the past 12 months provide International exposures, including a range of Global Sector ETFs and the Global Sustainability Leaders ETF. Book a trip to our website and browse these destinations!

Learn something new – Are you new to ETFs and want to learn more? The Insights section of the BetaShares website provides valuable information and educational items to improve your knowledge. Subscribers to our blog posts receive regular updates on the ETF market, invitations to our educational webinars and updates from our Chief Economist. Join us for the next webinar to ask our experts any questions you have on ETFs and learn about other topical market news.

Think about retirement – Or, more importantly, your retirement goals. There has been a lot of change legislated in the past 6 months, which may impact your retirement savings through superannuation. Some take effect from 1 July.  As a result, you may need to adapt your current strategy. We suggest you talk to your financial adviser before 30 June to discuss any changes.

Spend more time with family and friends – I’ve added this again, not a financial resolution but when we get busy we all occasionally need reminding – invest in the wellbeing of you and your loved ones.

We trust that our ideas will help you think about setting your own new financial year’s resolutions and positioning your portfolios to meet your investment objectives into the new financial year.

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