Invest for Capital Growth

Disclaimer: we are not financial advisors and you should seek financial advice to suit your specific needs.

A Balanced Approach

In the world of investing, finding the right balance has been crucial for our long-term success. Over the years, we have crafted an index fund investing strategy that aligns with our financial goals and risk tolerance. In this blog post, we share our approach, which involves a 50% allocation to international shares, a 50% allocation to Australian shares, and maintaining three years’ worth of living expenses in cash in a High Interest Savings Account. This strategy aims to strike a balance between growth potential and stability, while also considering the impact of currency fluctuations on our investments.


Diversification has been a key principle in our investing approach, and we have applied it by splitting our portfolio equally between international and Australian shares. By investing in international markets, we aim to benefit from the growth and opportunities available outside of Australia. However, we also recognise the importance of having exposure to our local Australian ASX market. Holding Australian shares helps us minimise the risk associated with fluctuating currency values.

Currency fluctuations can have a significant impact on the returns of international investments. When the Australian dollar strengthens against other currencies, the value of international investments in Australian dollar terms may decrease. By having a significant portion of our portfolio invested in Australian shares, we can offset some of this currency risk. This hedging strategy helps us maintain a more stable overall portfolio performance, especially during times of currency volatility.

A Place for High Interest Savings Accounts

Another important aspect of our investing strategy is the allocation of three years’ worth of living expenses in cash, particularly at a time when returns are reasonable in High Interest Bearing Accounts. This cash buffer serves as a safety net, providing us with financial security in case of emergencies or unexpected expenses. By keeping a portion of our portfolio in cash, we can avoid the need to sell investments at inopportune times, such as during market downturns. This liquidity ensures that we have the flexibility to cover our living expenses without having to disrupt our long-term investment strategy.

Rebalancing on Draw Down or Market Fluctuations

We understand the importance of regularly rebalancing our portfolio. Market fluctuations can cause the value of our investments to shift, leading to an imbalance in our desired asset allocation. To maintain the 50-50 split between international and Australian shares, we periodically review our portfolio and adjust our holdings as needed. Rebalancing allows us to stay true to our investment strategy and avoid overexposure to any single asset class.

Moreover, as we draw down on our investments to cover living expenses, we will need to be mindful of the impact on our portfolio balances. Regular withdrawals may necessitate adjustments to our asset allocation to ensure that we maintain a sustainable withdrawal rate and preserve the long-term growth potential of our investments. By staying proactive and monitoring our portfolio closely, we should be able to make informed decisions to support our financial goals and maintain a healthy balance between risk and return.

In conclusion

Our index fund investing strategy reflects our commitment to diversification, stability, and long-term growth. By splitting our portfolio between international and Australian shares, and keeping a cash buffer for emergencies, we aim to achieve a balanced approach to investing that aligns with our financial objectives and risk tolerance. Through disciplined rebalancing and careful monitoring of our portfolio, we strive to navigate the complexities of the market while staying focused on building a secure financial future.

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