Your next 10 years as an investor

The times they are a-changin’.

Investment manager Rob Makdissi concedes the investor landscape is not what it once was.

But he is confident there is still plenty of opportunity for investors to successfully build wealth, even if the path to their goals now looks a little different.

Rob has worked in wealth management since 1998 and has extensive experience in managing investment portfolios and tailoring trading strategies over Australian and international equities.

He says that while the investment landscape is definitely shifting, with the right management strategy, the future can still be bright.

“What’s changed is the bull market in bonds. We have had a 40-year bull market in bonds since the 1980s.

The volatility of interest rates also feeds into the market, and there is no doubt that is going to be elevated when compared to the last 10, 20 or even 30 years.

But we must remember that high interest rates aren’t bad for savers; in fact, it now gives them more optionality. For example, some investors might not have to take as much risk as they did in the past to get the income they need from their investments, and that’s a plus.”

At First Financial, we have always worked to identify an individual investor’s risk tolerance.

We use a methodology that analyses your current circumstances, which helps us arrive at an asset allocation.

From there we discuss your attitude to risk and adjust the asset allocation so you can sleep at night.

Rob agrees that, more than ever before, this approach to risk profiling for clients is paramount to investing success.

“In days gone by, a lot of investors got pushed further up the risk curve than they were comfortable with, but the prevailing environment gives them more optionality, and this is particularly good for members of the older generation who are de-risking.”

But the days of ‘set and forget’ investing may be gone for good.

“Gone are the days where you can just throw your money at something for 20 years and watch it grow,” he says.

“We must return back to the old school metrics in terms of assessing companies and really look at their debt coverage and return on invested capital, that sort of thing.

In the new investing environment, you won’t just be able to say that you want to buy a sector just because you’re interested in it. You’ll really need to closely look at the companies that are the most efficient users of capital with an active management style approach.”

“You really need to be looking at companies with strong balance sheets and a management team with a proven track record of using capital well.”

According to Rob, in the next 10 years, investors could expect times of greater volatility and, certainly, higher interest rates, underlining the need to consult professionals for advice before investing.

“Finding professional guidance becomes more important in a time of greater uncertainty, and more so than ever, investment analysis has to take into account what is happening around the world, not just in our own backyard.

We are going to see faster business cycles coming into play now.

In the past, we saw lower growth but also low-interest rates and that offered investors a real tailwind that didn’t change, but those days are gone.

Finding an investment manager who helps you to make timely decisions as market situations change and particularly in times of faster business cycles is paramount.”

Rob says investors would need to garner professional assistance to “actively monitor the market.”

“There will likely be no one asset class and no one style of investing that will work for you for a whole decade like there was before, and investors who relied on this will need to reconsider their investment plans.”

At First Financial, we create investment portfolios that are robust enough to withstand market volatility while still delivering income.

Our innovative and unique investment strategy consistently delivers great long-term outcomes because you are building a portfolio that is relevant for your time of life, based on your current circumstance… and adjusted for your attitude to risk.

To discuss how to bring your investment portfolio into the next ten years, contact our knowledgeable team today to make an obligation free consultation.