Asset Allocation Strategy ?

[Anh]

First of all Merry Christmas to you all!

Super is part of my plan for retirement/early retirement and also it's time of the year to reflect review and plan for next year.

We have some fund within our super and have been putting extra plus generous employer contribution to the maximum $25k/ year/ each. So super will be an important part of our plan.

I currently have my fund's asset allocation at High Growth ( 50-70% in international and Australian share) while my husband is at Balanced as he is older than me, and am not sure if it will be a suitable option for us moving forward. I understand that asset allocation is based on age, risk profile and individual goals.

What would you do if you were in your 30's, 40's 50's and 60's ?

Thank you

Anne

 

[devank]

I would look at what assets you have outside the super and then balance it.
I'm in late 30s. Since I have little bit of IPs and slowly getting into Australian shares, I have moved super into international shares and fixed/cash. Cash/ fixed also attracts smaller fee compared to others.

 

[china]

As you get older, it is generally advised to have a higher allocation in less risky asset classes such as cash or fixed interest. This is because you have less time to recover from disasters. Many retirees or aspiring retirees had to alter their plans during the 2008 GFC as their heavy expoure to shares via their super crippled them.

When you are younger, you can have higher exposures to shares, ETFs and property. For example, at age 30, 80% shares and 20% property. Age 70, 90% term deposit and 10% property. You can even afford to leverage into these assets if you can tolerate risk. However, most people already have leveraged exposure into property via their mortgage for their own home.

I think that having investment funds outside super is important as super is vulnerable to government attacks especially if you are only in your 30s.

 

[Anh]

Thanks China and Devank, i have done further research and have decided to leave my super in a Growth Option. ( 45% Australian share, 25% International share, the rest in Property, Alternative Assets, Fixed Interests and Cash) as i might not need super for the next 20-30 years.

Trying to pay off IPs and shares outside super as well.

 

[Peter_Tersteeg]

Asset allocation should be done based on the individuals "Risk Profile". A risk profile essentially tries to determine what sort of risks are or are not acceptable to you. Consideration is also given to what your goals are and how to acheive them, given what your circumstances are now and how they might change in the future.

Your investments are allocated to reflect that risk profile, your goals and your circumstances. Age certainly does have a subtantial impact on peoples risk profile (as people approach retirement they tend to lean more to asset preservation than asset growth), but it is not universal. Even in retirement allocation strategy is important as it can influence how quickly money is taken out in pension phase. Keep in mind that if you retire at 65, you still need to plan for another 20-30 years.

If you're being advised that since you're a given age, your asset allocation should be xyz, then you're being given very limited advice and you should go elsewhere.

 

[Anh]

Asset allocation should be done based on the individuals "Risk Profile". A risk profile essentially tries to determine what sort of risks are or are not acceptable to you. Consideration is also given to what your goals are and how to acheive them, given what your circumstances are now and how they might change in the future.

Your investments are allocated to reflect that risk profile, your goals and your circumstances. Age certainly does have a subtantial impact on peoples risk profile (as people approach retirement they tend to lean more to asset preservation than asset growth), but it is not universal. Even in retirement allocation strategy is important as it can influence how quickly money is taken out in pension phase. Keep in mind that if you retire at 65, you still need to plan for another 20-30 years.

If you're being advised that since you're a given age, your asset allocation should be xyz, then you're being given very limited advice and you should go elsewhere.

Thanks Peter,

I am aware that age is one of the factors when considering asset allocation, not the only factor. For my situation, i plan to have 40% of our retirement fund in super and 60% outside super ( Ips, share). My husband's super fund is more of a balanced fund, and while i am fair younger than him, with less super fund than him, i will leave mine at Growth for now.