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Blog | Deconstructing asset allocations and portfolio construction

JTB Studios
Private Client Adviser
4 Nov 2020

As Financial Advisers, some of the most common questions we get asked at dinner parties by friends and family are “Should I invest my money in shares or property?” or “Where should I invest my money?” 

Well, the answer is – it depends. There is no one size fits all because everyone’s financial situation is different. A lot of people invest blindly by simply following what other people are doing. To succeed in investing, you need to first understand what you are hoping to achieve. Once you’ve written down your goals and objectives, you then need to establish an investment strategy that is aligned with achieving them. 

Your investment strategy will include the spread of your investments across different asset classes. This is what we refer to as an asset allocation. We like to classify investments into 5 major asset classes: Cash, Fixed Interest, Property, Australian Equity, and International Equity. The pie chart below is an example of how one can construct their portfolio.  

Having the right asset allocation is important because it determines the overall risk of your investments and drives the long term returns of your portfolio.  

If you are someone younger, you might have a higher allocation to property and equities to help grow your assets as much as possible. However, this means that you would be taking on higher investment risk, which may be appropriate as you are young and have a long investment timeframe to ride through the ups and downs of growth markets.  

If you are retired or close to retirement, you would likely have a higher need for income. This means you may choose to have a higher allocation to cash and fixed interest assets so that you can rely on the income from your portfolio to meet your retirement living needs and reduce volatility and risk. 

Research has shown that having an asset allocation cater to your needs has a greater impact on returns than specific investment selection. Your asset allocation is dynamic and will change as you move through different life stages.  

At Hewison Private Wealth, we spend a considerable amount of time trying to understand our client’s situation, their risk appetite, and more importantly their goals and objectives. We create bespoke portfolios with tailored asset allocations for every one of our clients to ensure that their investments align with what they are looking to achieve.  

If you are having trouble with constructing your portfolio, please feel free to reach out, always happy to help, especially when it comes to your future.


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.