Time for a change? - MGD
14 January 2020

John Barton

Director and - Chief Executive Officer

Often referred to as the lucky country, Australia has long enjoyed the comfort of decades of sustained economic growth. This situation has facilitated the development of simple yet effective approaches to investment; investing in known quantities such as domestic equities and property, and operating under a policy of if it ain’t broke, don’t fix it. Doing so has been consistently viable as a result of the nature of our nation’s economy and our collective good fortune as a country. Even when the rest of the world struggled amid the Global Financial Crisis, Australia was able to weather the storm in relative calm and observe uninterrupted (economic) growth, in no small part thanks to surging natural resource export demand from a booming China. With this history in mind, you could be forgiven for remaining optimistic about our nation’s economic outlook and displaying a reluctance to change current investing approaches and strategies.

However, history has time and time again proven the adage that past performance does not guarantee future success. Uncertainty is present, even at the best of times, but with our world changing rapidly across multiple dimensions, avoiding complacency is more important than ever before. The stability we have become accustomed to, and perhaps taken for granted, may soon become a thing of the past. The Australian National Outlook 2019 explores Australia’s outlook for the years to come, identifying the key challenges that we will likely face. It looks at increasing complexity surrounding trends including the rise of Asia, technological change, climate change and environment, demographics, trust and social cohesion.

The report outlines two possible pathways for Australia in the face of a changing societal and economic landscape: an inaction-driven slow decline or an adaptive approach that accounts for the realistic changes we have observed and will continue to experience in the years ahead. While the recommendations were made for the nation, they also have merit when extrapolated for use by us as individuals. Sure, we may not be able to make the sweeping policy reforms recommended to account for the forecast demographic changes caused by an aging population. But there are things within our control, like taking the outlined trends into account to ensure that we limit their impact when possible.

This may come in the form of ensuring that an investment approach isn’t overly dependent on the performance of Australian equities, or completely aligned to residential property. Your current strategies may have been lucrative for you so far, but the best investors make sure they review their approach regularly to make sure the vehicles they are using are still optimised for our ever-changing economic environment.

Nuanced issues require nuanced solutions, and if you are looking to achieve a bright future for yourself and avoid stagnancy, it may be time to re-evaluate your current financial approach.

If you are looking for advice as to how to best prepare for the uncertainty of the future or would just appreciate a fresh perspective on the financial strategy you are currently using, please get in touch.

Disclaimer: This article contains general information only and is not intended to constitute financial product advice. Any information provided or conclusions made, whether express or implied, do not take into account the investment objectives, financial situation and particular needs of an investor. It should not be relied upon as a substitute for professional advice.