I would like to get advice on constructing a simple blue chip index fund (set and forget) - balanced fund passively managed 40% - 60% income growth.
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When considering this type of investment you must take into consideration a number of aspects before deciding whether that investment is appropriate for your circumstances.
First of all it is important to consider what your investment timeframe is. If you only plan to invest for 1-2 years it might not be appropriate and you might want to consider investing in something more secure like a bank account or term deposit. This is largely because investing in blue chips exposes you to the share market which has the risk of volatility and the shorter your timeframe reduces the chance of riding out that the bumpiness in markets which can be experienced from time to time.
Second of all it is important to understand what your tolerance for risk is and whether your tolerance is suitable for that type of investment. You can do this yourself or seek guidance from a financial planner to help understand what the right investment approach is for you. Completing a risk tolerance questionnaire would involve you answering a number of questions which helps gauge your tolerance for risk. After answering the questions you would then have an understanding of your tolerance for risk which can equate to 50% growth investor for example. This simply means that you would be comfortable to invest 50% of your investments in growth assets which is comprised of Australian Shares, International Shares, Property, and Alternative investments. The other 50% is invested in defensive assets which is comprised of Cash and Fixed Interest.
Once you have an understanding of your investment time frame and attitude to risk you should be armed with enough information to understand whether this investment is right for you. If you believe the investment is right for you I would seek the expertise of either a financial planner or stock broker to help select the right index fund for you.
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