Chris Brycki

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759 appearances 3 recordings 2 series first heard Mar 2022 last heard 30 Jul

Chris Brycki’s voice in public audio — every appearance, attributed to the second.

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Australian Finance Podcast · Investing in defensive assets: Cash, bonds & gold · 21 Mar 2022 podcast

I mean, it's a good point and I think it's a question we often get from our younger clients as well is why can't I just be entirely in growth assets?

Certainly over 100 years, like growth assets have done better than defensive assets.

So naturally, you know, anyone that wants to optimise, maximise their returns, you know, will want more of that in their portfolio rather than the thing that hasn't done well.

I mean, going back to your point about Buffett, although...

Yeah, I mean, he sort of may think that equities is great and certainly in his Berkshire Hathaway portfolio, it's an equities portfolio.

I think he's also said of his estate that he put 90% in an S&P 500 index fund and 10% in a bond index fund, government bond index fund.

And so, and that estate of his basically has an indefinite timeline.

It's a perpetual sort of investment, you know, which I think is probably the right sort of thinking.

If you had an unlimited time horizon, you know, probably a 90-10 sort of split between growth and defensive assets makes sense.

But then it goes to, you know, why would you have any defensive assets, you know, if your timeframe is 100 years or, you know, most listeners is probably less than that, it might be 10, 20, 30, 50 years, you know, there's really three reasons that, you know, that I think the defensive assets still have a place in a portfolio.

So first,

Although you might have an intention of investing for a certain amount of time, people's circumstances do change.

We saw this in March 2020 when markets collapsed, there was a global pandemic, people lost their jobs, people had the opportunity to release their super early.

Without any defensive assets in your portfolio, you're basically forced to sell growth assets at very distressed values in a scenario where you need money unexpectedly.

whether it's with your discretionary savings or super or any other sort of long-term investment although it's unlikely to happen um you know it does happen and march 2020 was a perfect example you know those with defensive assets you know were in a better position because they could be selling more of the defensive assets than the growth assets when they needed that capital

So that would be one.

Two, I think just from a psychological perspective, and we see it with our clients, you know, absolutely is defensive assets just keep you confidently invested when markets are volatile.

As much as, you know, I think when clients of ours say when they sign up that they are very comfortable with risk, you know, what we notice is particularly with people that don't have, you know, generations or decades worth of experience is that, you know, the first one or two market corrections that they have to,

It's a pretty nerve-wracking experience.

I see at the moment our market's only down 5% or so or 5% or 7% from its highs.

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