SMSF Investment StrategiesSharing Simple Strategies for Self Managed Super Funds
Risk vs Reward
After the spectacular stock market rally of 2009, even the most bullish analyst is not expecting an encore of this performance in 2010. The more optimistic forecasts are for a 10-20% increase but the odds are higher for stocks to go sideways or down in 2010. There is still a lot of uncertainty if the fragile recovery can continue in 2010. On Friday, JP Morgan (one of the better run big banks on Wall St) announced their 4Q earnings and despite record earnings, their stock price fell because most of the earnings came from the investment banking business while the consumer lending business continue to suffer losses. What worried investors more was when the CEO and CFO both issued very cautious outlooks for 2010. They expect losses of $1 billion in 1Q/2Q of 2010 and said credit delinquencies may worsen. To me there is now more risk than reward in stocks so I not actively looking to make new long term investments in stocks. In my 2010 asset allocation for my SMSF, I am definitely favouring lower risk investments over equities even though their returns may be modest. A small positive return is still better than a negative return.
This year I have decided to focus on improving other areas of my life, like my health. For sometime now, I have been concerned about pain in my left shoulder and arm which I am quite sure is due to poor posture when I am using the computer. Like most middle-aged people, it is an uphill struggle to maintain my ideal weight and from this recent article about surging obesity in Australia, the problem is due to our lifestyle. According to obesity specialist John Dixon, ‘People didn’t choose to be obese,” he said. ”We put a modern environment on top of them, we’ve changed the intensity of life, we’ve put them in chairs with screens in front of them, we’ve put vending machines all over the place, we’ve increased the fat in foods, etc”. My top priorities for 2010 are:
- to get back to my ideal weight so I can fit comfortably in my jeans again and
- to improve my posture and flexibility
I did a calorie counting diet plan with Kingsley in early 2008 which was quite successful but it was very troublesome to have to keep a food diary so we stopped after we reached our weight goals. After some time, the kilos just came back. This time, we are trying out a new diet which does not require counting calories which can fit in better with our social life as it allows eating without any constraints a few times a week. This makes the diet more manageable than those that restrict you from certain types of food (which instantly makes you crave them even more) and makes it hard for you to participate at social gatherings. Hopefully, this one will work well and we will be able to keep the weight off for good.
Whatever the outcome, I plan to continue to educate myself on maintaining good health. After all, there is no point in having wealth if you don’t have good health. Just like investing, there many fitness “gurus” out there with all sorts of programs and it is up to us to find one that works best for us.
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[...] I do not see any reason to maintain a high percentage of our funds in equities (see earlier post on Risk vs Reward). Unlike large public funds with thousands of members, it is very easy for a SMSF to change the [...]