Grow your wealth in challenging conditions

Today many investors are challenged by a low yield environment. They’re seeking money to live on – but at low risk. Cash is flowing into a few select asset classes, assets perceived to offer that crucial combination of low risk and reliable income. Paradoxically, instead of finding greater safety, investors may be concentrating their risk and driving the price of some defensive assets into dangerous territory.

In a low-return world the temptation is to seek safe and stable income from the obvious places, however this approach may actually work against you. Unfortunately there’s no perfect solution when economic forces combine – at least in the short-term. But being told why you’re stuck between a rock and a hard place doesn’t count for much if you aren’t presented with alternatives.

What are the alternatives? 


One of the alternatives worth considering is (ironically named) alternative asset classes. These alternative investments fall outside traditional share and bond markets and their performance is largely determined by different factors.

Let’s take the alternative asset class of private equity as an example. Private equity is just a different name for private companies – companies that aren’t listed on the sharemarket. In broad terms a private equity manager achieves returns for investors by buying into private companies and seeking to generate income and growth from those assets.

There’s lower correlation in return generation.

Some of the key factors determining private equity value are different from those influencing broader share market performance. This is why private equity is considered an alternative investment.

Which brings us back to the rock and the hard place.

If the outlook for your returns from traditional investments looks subdued, alternative investments may be a smart way to diversify. And there are a range of alternatives.

In this video, Perpetual Private’s National Investment Specialist, Luke McMillan, explains why alternatives deserve serious consideration in light of the headwinds facing traditional investment markets.

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There are many elements to a good financial plan – setting goals, financial strategies and products, regular reviews and much more. But according to state manager for financial advice in NSW and ACT, Fotini Mastrogianni, the most important element is the conversations an adviser has with their client. “Unless you understand a client, you can’t help a client,” says Fotini. “We put a lot of effort into those early meetings because if we get them right the rest of the process – the strategy, the products, the results for the client – flow naturally.”



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