Key points
- While growth assets like shares go through bouts of short- term underperformance versus bonds and cash, they provide superior long-term returns. So, it makes sense that superannuation has a high exposure to them.
Both income and capital growth are important aspects of investing, but they can serve different purposes when part of a well thought out strategy, which is prioritised based on your needs, objectives, and circumstances.
It certainly can't have escaped your notice that the shares in the top companies of Australia and the world got hit mighty hard last year. The extreme volatility has dominated the news headlines, adding fuel to the post Covid uncertainty.
Don’t put all your eggs in the one basket. Us planners use the word diversification to explain this concept.
Feeling a bit seasick from the volatility of the world’s financial markets?