I’m 42 and currently employed. I currently have 150K invested in mainly Australian shares. Should my international vs national stock investment distribution change because of the Covid-19 Pandemic? If so, where should I concentrate?
Gavin in Cronulla, NSW
Top answer provided by:
Gavin, my mother used to always say: “Don’t put all your eggs in the one basket”.
I’m not sure she was directly speaking about where to invest money, but when it comes to investment selection this saying rings true: Diversification is key. Whilst Australian shares have been quite lucrative since the GFC (having performed exceptionally well with high dividend income - with some nice tax concessions on the side), the Australian market is a relatively small one dominated by four big banks, a couple of green grocers and some miners.
Whilst that may seem like a large generalisation, the point I am making is that it is a small market that is highly dependent on what happens elsewhere in the world. Of course, without knowing your exact preferences for risk and investments I can only give general advice, which is that diversification can deliver better risk adjusted returns.
Does that mean now is the best time to change your investment strategy? Well that is up to you and your adviser to decide based on your risk profile and investment preferences, but I have always believed in the merits of a well-diversified strategic asset allocation where “time-in the market” outperforms trying to “time the market”.
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