The perfect Investment Portfolio and it’s not even worth boasting about…

Posted In Investments | Personal Wealth | Wealth Building
3 May 2017
boasting about investment portfolios

The perfect investment portfolio wouldn’t sell a single newspaper. It’s not sexy, doesn’t get your heart racing, won’t earn the respect of your colleagues or give you a cool story to share with friends.

Yet, when you think of the investment stories you do hear at work, the pub, the BBQ, the cricket, in line at the supermarket, it’s never a tale of consistent and calculated returns, it’s someone boasting about a stock that’s skyrocketed and made them ‘an absolute killing’.

I’d love to tell you how exciting investing could be but the important stuff that makes investment portfolios great (and it’s not the investments) is what makes them pretty boring.

Don’t get me wrong, I love a success story – in sport, in business and especially in finance – but the problem with a great story is there’s generally a big risk associated (it’s what makes them worth telling) and you don’t tend to get the full story… Not a great combination to build your financial future on.

never rely on luck when building your investment portfolio

So what’s the ‘important stuff’ that makes investment portfolio’s so boring?

Most people know what an investment portfolio is – a mix of investments, generally made up of shares, property, bonds, debentures, cash, wholesale and retail managed funds, and/or other marketable securities.

Investment portfolio opportunities

While people are interested in what’s happening in the property or stock markets generally, what’s ignored are the foundations and structures that investment portfolios are built on – the investment portfolio plan.

The difference between ‘buy and hope’ and serious long term performance

You need to plan your attack before investing; that means considering your constraints (time, attitude, capacity), contributions, allocations, diversification, rebalancing frequency, engagement and evaluation measures – these ensure your investment portfolio won’t keep you up at night (or make the headlines).

investment portfolio plan framework

In addition, because investing should never be for the sake of investing (I would suggest anyone who argues otherwise was bullied a lot in school) a portfolio plan should include your financial, personal and risk objectives – it’s how you know you’re headed in the right direction.

With all the boring bits in place, you then add investments to your portfolio.

Are you investing for the glory or a better tomorrow?

Do you want to be the quiet achiever or are you wanting the excitement that comes from uncertainty, exposure and large potential windfalls? With so much to consider before a serious investment portfolio gets off the ground, the excitement that comes from big surprises, big exposure, big uncertainty is reduced.

Unfortunately for the quiet achievers, they will likely miss out on boasting rights, though most are too busy enjoying consistent financial growth to mind.

Stephen Vick

Written by  Stephen Vick

Stephen holds a Bachelor of Business majoring in Banking/Finance & Accounting, a Diploma of Financial Planning, a Diploma of Finance & Mortgage Broking Management, Specialist SMSF accreditation, a Real Estate Agency License, and is a member of the REIQ. He has spent 20 years in the finance industry and has held State Manager Roles with Australian Finance Group (AFG), Australian Unity, and Lawfund Australia. His last institutional role was with MLC as an advisor to financial planners.

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