With record interest rates, a running stock market and slow economic growth, it is certainly a strange (and almost unprecedented) period to invest. This is where a balanced approach comes into play: equilibrium is the process of managing risk effectively in an attempt to capture the upside and limit the downside.
Here's how I'd build a $ 100,000 "balanced" portfolio in today's market, starting with the most conservative investments and ending with the most aggressive.
Sydney Airport Holdings Pty Ltd (ASX: SYD) – $ 25,000
Sydney Airport is an excellent example of conservative investment as it acts as a so-called "proxy bond". Sydney's Kingsford-Smith airport is NSW's only international commercial airport – travelers have only one option to enter and leave the state if they want to go overseas. This gives Sydney Airport a huge and lasting competitive advantage and one that will remain solid even in difficult times – making the company a solid reserve of income for now and for the future.
Wesfarmers Ltd (ASX: WES) – $ 25,000
The Wesfarmers were Australia's largest non-government employer before the spin-off of Coles Group Ltd (ASX: COL) in November last year. Wesfarmers still maintains a 15% stake in Coles and owns a large collection of other companies such as Officeworks, Target, Bunnings is Kleenheat Gas and many others. I like the Wesfarmers because you get a diversified and all-season juggernaut with gain bases that extend to the whole economy, which also gives a good dividend.
Macquarie Group Ltd (ASX: MQG) – $ 25,000
Many would say that you can't have an adequate ASX portfolio without at least some financial exposure, and I went with Macquarie Bank here. Macquarie offers retail banking services (mortgages, loans and term deposits) but most of its earnings come from infrastructure investments, banking and capital investments, and asset management. This gives Macquarie the enviable quality of being able to generate direct elimination capital returns while also providing a pact dividend. Macquarie shares have returned more than 20% annually to its investors over the last 10 years and I think it is a great place to invest funds.
Xero Limited (ASX: XRO) – $ 25,000
Here we have a pick plus go for the broken & # 39; with Xero. Xero is a software provider as a service (SaaS) and is generating phenomenal growth numbers with its cloud-based accounting software. The growth of subscribers for the last year reported was 30% in the north and by all accounts, this shows no signs of slowing down. I like Xero mainly thanks to its subscription model, which allows an exponential growth potential of profits (just think Netflix). Xero's shares are very expensive at the moment, so maybe a staggered entry into this stock would be appropriate, but Xero is definitely a quality growth company and one that would suit me a little money.
I think that with this portfolio, we are getting a good balance between solid defensive stocks and some growth choices that could turn into highly profitable investments over time. In my opinion, having this kind of balance is important at this point in the investment cycle, as it is difficult to predict what might be behind the corner.
Make sure you take a look at these choices too – all these would be good additions to our balanced portfolio!
Our first 3 Blue Chip Shares for 2019 – NOW AVAILABLE!
You're invited! For a limited time, The Motley Fool Australia is giving away a new urgent investment report detailing our 3 TOP BLUE CHIP SHARES to own in 2019.
So, if you like reliable, stable and high-performance companies that pay fat and totally exempted dividends, we'll cover you!
The # 1 is a dear old Australian company that turns its attention to high-margin companies … and quickly returns liquidity to shareholders with its heavy dividend …
While Stock # 2 is an online power that is rapidly gaining market share worldwide … ready for years (or even decades) of tremendous growth …
Even better, Stock # 3 offers a huge 6.5% dividend! That beats the rates of term deposits directly out of the water – and also offers the potential for capital gains.
You can discover all three shares within our new report now. To collect your FREE copy, simply click on the link below right now. But you'll want to hurry up: this free report is available ONLY FOR A LIMITED TIME!
Simply CLICK HERE FOR YOUR FREE REPORT!
Motley Fool collaborator Sebastian Bowen has no position in any of the stocks mentioned. Motley Fool Australia holds shares and recommended Macquarie Group Limited, Sydney Airport Holdings Limited and Wesfarmers Limited. Motley Fool Australia owns shares of Xero. We Fools may not all have the same opinions, but we are all convinced that, considering a wide range of insights, we have become better investors. The Motley Fool has a disclosure policy. This article contains only general investment recommendations (with AFSL 400691). Authorized by Scott Phillips.
. (tagToTranslate) xero limited (t) asx: xro (t) xero price of the stock (t) xero price of the stock (t) xro price of the stock (t) xero dividend (t) wesfarmers ltd (t) asx: wes (t ) wesfarmers share price (t) share price wesfarmers (t) share price wes (t) dividend wesfarmers (t) macquarie group ltd (t) asx: mqg (t) macquarie group price action (t) macquarie group price shares (t) quota mqg price (t) macquarie group dividend (t) coles group ltd (t) asx: col (t) coles price action (t) coles price action (t) with price (t) coles dividend (t) sydney airport holdings pty ltd (t) asx: syd (t) price of sydney airport (t) price of sydney airport (t) share price syd (t) sydney s (t) s & p / asx 200 (t) index: ^ axjo (t) indexasx: xjo (t) asx: xjo (t) portfolio (t) portfolio construction (t) risk management (t) shares (t) stock option (t) balanced portfolio (t ) asx (t) investment (t) shares (t) sharemarket (t) blue chip (t) dividend (t) 2019 shares (t) in case of purchase (t) high yield (t) low cost shares (t) buy (t) hold (t) sell (t) s & p / asx 200