A research-driven approach to Investment Portfolio Management

An investment portfolio is a collection of various types of asset classes such as shares, property, bonds, debentures, cash, wholesale and retail managed funds, and other marketable securities.

Appropriate investments can contribute income, capital growth or both towards building your personal wealth. Investment portfolios should consider all major asset classes and appropriate performance structures.

investment returns explained

An investment portfolio plan outlines asset allocation, diversification and rebalancing frequency and is performance targeted for individual financial positions and objectives.

Taking the time upfront to establish an investment portfolio plan helps align individual financial capacity and long-term wealth objectives with the right investment asset classes and management structure. This ensures investment selection is supported by an overall strategic framework.

investment portfolio plan framework

Balancing returns against risk

Selecting which asset classes will increase personal wealth most efficiently requires careful consideration against the backdrop of all other financial matters relating to individuals and their circumstances.

investment portfolio analysis

Optimising asset selection for individuals is the process of calculating which combination of investments will provide the highest returns for the lowest risk, in financial terms this is referred to as the Efficiency Frontier.

This is not a one-size fits all approach, establishing a plan for each individual that is reflective of their needs, goals, capacity, and tolerance to risk requires a suitability analysis of multiple asset classes.

Investment selection is not just about picking the best stock or even asset class

Nor is it about timing the market or concentrating funds in a specific market sector. Real results are achieved through compounding performance over long time frames; increasing returns while lowering risk throughout this period is best achieved with diversification across stocks, sectors, and asset classes – a short-term approach increases risk and can significantly impact your overall wealth plan.

asset class performance

Considering the performance of asset classes above, the difficulty of consistently selecting the asset class with the highest annual growth, and avoiding assets with negative growth, is very evident.

For more information on building an investment portfolio and what our wealth management team focuses on to align financial goals with appropriate asset selections, see Investment Selection and the Impact on Debt Reduction and Building Wealth.

Ignoring any single asset class is a lost opportunity to increase long-term returns and decrease risk.

risk of major asset classes

As the above graph shows, over time the ups and downs of asset classes tends to even out and the gap between the highest and lowest returns closes. A higher return over time can be achieved for a lower level of risk by combining multiple asset classes.

Structuring an investment portfolio is a complex area that requires sound financial advice and a degree of careful decision-making. The wrong configuration for individual financial positions and finance objectives can adversely effect performance, place unnecessary stress on personal finances, and put other components of your wealth plan at risk.

The Nexus Private financial planning team work with our clients to build an investment portfolio plan for individual financial positions and objectives. With the Nexus Private wealth management portal your personal financial performance is only a click away.

Managing your portfolio is simple

wealth management portfolio portal

Our wealth management portal offers comprehensive reporting on a wide range of wholesale and retail managed funds, direct shares, direct property, and insurance. With live feeds from all investment and bank accounts, this all-in-one administration service and cash management tool reduces the complexity of managing your portfolio and gives you a real-time snapshot of your net wealth position.

Overall structure has a huge impact

Structuring an investment portfolio to compliment the strategies and opportunities that exist within the legislative framework of Australia’s Banking, Investment, Superannuation and Taxation systems can enhance wealth accumulation.

Coordinating an approach against the backdrop of all other financial matters highlights opportunities for further gain…

the value of financial advice

The right gearing structure combines the effects of loan interest and taxation savings with increases in your investment portfolio. The compounding effects of this alone can be significant, but coupled with a robust asset acquisition plan and your investment portfolio ceases to be a stand-alone performer and becomes a component of a strategic wealth accumulation plan.

See why portfolio growth improves substantially when coupled with the right financial structure

This information is of a general nature only and neither represents nor is intended to be specific advice on any particular matter. We strongly suggest that you seek professional financial advice before acting.