Using ETFs, this portfolio recommends putting 20% into each of Australian stocks, international stocks, intermediate term bonds, commodities, and REITs.
Using the build your own portfolio tool you can see what tweaking this beginning portfolio can do. For example, replacing half the commodities allocation with gold and half the bond allocation with extra international stocks, increases the return to 6.1% and the SWR and PWR to 5.2% and 4.4% with almost no increase in drawdowns.
Going to 60% stocks divided equally between Australia and the rest of the world and 10% in each of bonds, gold, commodities, and REITs, is actually quite similar in return profile to the Ivy Portfolio. The key thing is to hedge Australian stocks with international and real assets. This latter portfolio is probably going to tbe basis of my own new target portfolio.
1 comment:
How do you take into account your existing weighting towards real estate (ie your house), given that we (Australia, esp. Sydney and ACT) have v. high house prices. So, although you might normally (in the US) ignore that $300K or whatever that is committed to housing (as an example) when evaluating overall asset allocation, here in Oz one's house consumes a larger proportion of available assets - so it should probably be considered part of one's investment portfolio (after all, you can always sell the house and rent instead, thus freeing up your housing equity to invest, or even just borrow again housing equity to invest) when considering overall asset allocation.
For example, I tend to invest mostly in equities and not bother much with REITs, as I am already largely 'invested' in real estate via our home equity (and now also have an 'off the plan' apartment investment deposit, so will have a large investment in real estate from 2023 onwards).
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