Investment Planning


Setting up an Investment Plan that reflects your personal Investment Attitudes is the key to quality advise. An investment plan should reflect your Objectives and your Goals.

Ensuring your portfolio is invested into the appropriate asset classes and has the right weighting towards each of the asset classes, is the only way to manage your Investment risk.

New Wealth Directions specialises in this very important area of Investment Planning, tailoring investment risk to your Investment Attitudes is our speciality. Our process ensures you sleep soundly whilst we monitor your investments.

Asset allocation:-is extremely important in order to smooth out returns, traditional asset classes such as:

·        Cash

·        Fixed Income

·        Property

·        Australian shares

·        International Shares

these assets get mixed into various types of investment funds, some more common ones are called:

·        Capital Stable Fund

·        Balanced Fund

These funds mix up the asset classes to diversify the mix of asset classes to manage the investment risk you are exposed to through the various asset classes.

Capital Stable funds:- usually comprise of approximately 60 – 70% defensive asset classes and 20 – 30% shares

Balanced Funds:- usually comprise of 60 – 70% shares and 20 – 40 % defensive asset classes.  

Fund Managers will change the mix of asset allocation accordingly as economic times change.

You might think this all seems very plausible and logical but there are issues in the way that 3 of these asset classes behave, Listed Property, Australian Shares and International shares are highly correlated to each other, they cycle up and down in a similar fashion especially in the last 5 years or so. We live in such a global economy these days that the share markets that these three asset classes operate in, are all subject to economic reactions no matter where they occur in the world. The markets are reacting to news instantaneously all the time, all round the world.

Why is all this important to you, well if these three asset classes react in similar fashion to global economic news, it means your portfolio is exposed to investment risk and exposed to economic downturns.

We at New Wealth Directions compliment the above by introducing clients to new asset classes that have the ability further diversify your investments and therefore reducing your portfolio exposure to investment risk.

Uncorrelated Asset classes:-this term is used to describe asset classes that DO NOT go up and down with each other.

Some examples would be:

·        Precious metals

·        Agriculture

·        Shopping Centres

·        Energy

·        Infrastructure

When a portfolio has extra asset classes added to it, the investment risk your portfolio is exposed to, is somewhat reduced. The mathematics is such that reducing Investment risk by adding uncorrelated asset classes to your portfolio has limitations of around 12 - 15 asset classes, this is the limit before the effect of adding asset classes does no longer have any significant reduction in investments volatility.

Investment risk cannot be reduced to zero but it can be smoothed out.

Self managed Super funds:-The above is very important reason why you would set up a self managed Super Fund. They allow you access to all the above asset classes and many more. These types of super funds have the ability to invest in specific asset classes that reflect the current economic times best of all. 

With this freedom you can tailor your asset classes to reduce risk and get access to asset classes that are emerging in science, bio technology, shale gas, ETF’s , Index funds, various types of agriculture etc etc.