Try these easy ways to spread risk
Making Money with Paul Clitheroe
AS WE head towards the end of 2017, investors have enjoyed a pretty good 12 months - especially if you haven't had a significant chunk of your wealth tied up in cash.
The official cash rate has remained unchanged for the entire year, and that's been a plus for local businesses - and Australian shares. As at mid-November, the ASX 200 Total Returns Index had dished up gains of 11.27 per cent for the year to date.
All asset classes move in cycles, and reflecting the economic recovery that's taking place in many developed nations, international shares have been a strong performer this year.
The MSCI World Index (excluding Australia) notched up gains of 18.9 per cent for the year to date.
It's a compelling case to add global equities to your portfolio. An international share fund - either listed or unlisted, offers an easy way to do this.
Residential property has once again attracted plenty of media attention.
According to CoreLogic, values in Sydney have begun to cool, with annual price gains of 7.7 per cent as at the end of October. Values in Melbourne have soared 11 per cent. But the real scene stealer has been Hobart, where property values have climbed 12.7 per cent over the past 12 months.
For property investors, the slowing pace of capital growth especially in Sydney, reflects in part, tighter credit policies among lenders. Coupled with rate premiums for interest-only borrowers, this is forcing many people to consider whether a rental property really suits their long term goals, and that's not necessarily a bad thing.
One asset class that can that be easy to overlook is infrastructure. Yet things such as toll roads, railways, airports and utilities can be a steady performer for investors.
The ASX Infrastructure Index has achieved gains of 12.79 per cent for the year to date. As with international shares, you could invest directly in individual infrastructure companies but an easier way to get a slice of the action is by investing in an infrastructure fund. This also has the advantage of spreading your money across a broader range of underlying assets.
With returns on cash still looking very ho-hum, it could be worth looking beyond savings accounts (where you'll be lucky to earn 3 per cent before-tax), and think about where you could put at least part of your money to work in 2018 to earn a stronger return.
Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.