Andrew Page

The long term performance of share markets is truly remarkable; a fact that is easily demonstrated by looking at a chart of any major market index. Despite regular and often severe effects such as wars, recessions, bubbles and crashes, the major industrialised markets have always recovered and gone on to carve out bigger and better gains. Over the long term, the share market has always outperformed all other asset classes, period.

This week we learnt that Australia has (so far) narrowly avoided a recession; a technical recession that is. However there is another technical definition that has so far largely escaped popular attention…

If the possibility of a market downturn has you worried, you might want to consider purchasing some insurance for your portfolio. Here I am referring to a process called ‘hedging’, which ensures that your downside risk is limited by purchasing a financial instrument that will offset any loss incurred in your portfolio.

As investors, we are understandably focused on achieving the highest return possible. The higher our return, the more money we make and the sooner we can retire. So it is of course important that we make our money work as hard as possible.

When it comes to investing our hard earned cash, what most people crave is certainty. That is, we want investments that will deliver a reliable return over a certain time frame, and indeed there are investment products that essentially do just that, such as term deposits and bonds.