Drew Meredith

The approach of retirement requires a profound change in how investors approach markets and construct portfolios, including arranging their income needs around three distinct periods of retired life, the financial advice firm’s founders said.

With monetary policy returning to what could best be described as normal settings, investors need to adapt to the changing circumstances, writes Wattle Partners principal Drew Meredith. It’s time to move away from risky growth assets and stop building portfolios for a ‘zero-rate’ environment.

Investors and advisers have a tendency to extrapolate recent events into the future, and the last six months have shown how dangerous this can be. For those reviewing and building portfolios as the new financial year begins, five key issues should be front of mind.

The RBA’s sharp policy shift towards higher rates has put significant wind in the tail of “boring, old” bonds. But do Australians understand the role they play in the fixed income spectrum, and what they can do for portfolios?

The popular debate lacks nuance. Neither is foolproof but both can play a crucial role in building portfolio resistance and balancing the risk/reward dynamic.

Much of what keeps Australian investors up at night – and the biggest investment mistakes they make – could be avoided through a greater focus on financial literacy, especially as markets “start acting like markets again”, the private wealth manager’s directors Jamie Nemtsas and Drew Meredith said.

The Treasurer’s plan to limit concessional tax treatment within super at $3 million comes without a lot of the details required for effective retirement planning. Making bold changes now could be costly, says Wattle Partners principal Drew Meredith.

ETFs have “well and truly taken over from actively managed funds” in investor preference for growth investments, advisers say – but when it comes to cash, they recommend eschewing the increasingly popular ETFs in favour of direct investments.

Ever since the GFC, interest rates around the world have been on a trajectory to zero, which acted as a proxy tax on investing for retirement for millions. But the current economic is a whole new ball game, writes Drew Meredith.

Australia may have fared better than its international peers, but markets still took a pummelling in 2022, with traditional safe havens and equities alike bearing the brunt in a wildly dislocated market.