WA Super News

Healthy investing is as important as healthy eating

14/06/2019

Vegies are boring. Broccoli. Beets. Brussel Sprouts.. All boring. Grains are also boring and, like quinwa... qeenua… keanhua…  unspellable.  Bear with us, you’ll finally understand boring investments after reading this.

Just as you need a balanced diet for healthy living, you need a balanced portfolio for healthy investing. We all know to have a healthy diet, you need to include the five food groups: proteins, grains, dairy, vegetables and fruit. Healthy investing is similar. It’s about holding a variety of assets from five asset classes: equities, real assets, alternatives, fixed income and cash.

Healthy investing pie chart and asset class pie chart low res for article

Equities: The proteins of investing

Just like proteins, equities (or shares) are important for healthy growth. Having both Australian and global equities is important, too. As is having a variety of different local and imported equities. In other words, a Texan steak, Japanese sashimi, and a British Sunday roast should all be in the mix. Now that’s a meal.

Real Assets: The grains of investing

Real assets are staples and include property, infrastructure and agriculture. The objective of investing in real assets is to target returns that are highly correlated to inflation. A good real assets portfolio is more than just an investment property in Mandurah, it should include commercial, retail and industrial property, along with several types of infrastructure assets. It’s similar to choosing the traditional grains of wheat, oats and rice, then throwing in some couscous and qynwah… quinua… you get it.

Alternatives: The dairy of investing

Alternatives helps your portfolio have strong bones which makes it resilient to market downturns. Alternatives can be in the form of hedge funds, private equity and more exotic investment strategies, such as reinsurance. Most of these should be included in moderation. Like dairy, you can substitute these types of assets for something like soy or almond milk. Equally, you need to make sure you’re actually meeting your dietary requirements and not just filling up on ice-cream.

Fixed income: The vegetables of investing

The boring vegetables of the investment diet is Fixed income. Often pushed to the side of the plate or hidden in a napkin, Fixed income are the overlooked heroes of a healthy investment portfolio. Primarily in the form of bonds, these provide stable income that protect against inflation and can keep your portfolio ticking along nicely.

Cash: The fruit of investing

You generally need less cash than fixed income, just like you need less fruit than vegetables. Cash is still important to have on hand to use when assets are cheap, or to fund expenses if you’re in retirement. And who doesn’t like mango?

Variety is the spice of life

A healthy investment plan should include all five of the above asset classes. Speculative investments, as in the case of soft drinks or a deep-fried hamburger, are best kept to a minimum.

Eating well can be tricky and, as noted before, boring. In the case of investing, you don’t have to worry about that. It WA Super’s job to ensure you’re investing in a healthy way. If you’d like more information email info@wasuper.com.au or call 08 9480 3500.

 

Now for the bit more boring than quinoa
Our investment options invest in these asset classes in different amounts. All of them can go up or down. Those asset classes that are higher risk can go down more frequently and can generally fall more than lower risk asset classes. 

Information in this article is general in nature and doesn’t take into account your personal objectives, situation or needs.  Before making a decision about WA Super, read our product disclosure statement at wasuper.com.au.

WA Local Government Superannuation Plan Pty Ltd ABN 64 066 797 162, AFSL 269006, as Trustee for WA Local Government Superannuation Plan ABN 18 159 499 614 (trading as WA Super).

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