Page 9 - FWP Wealth Adviser newsletter - Issue 117: August 2025

ISSUE 117
AUGUST 2025

Financial resilience is more than technical know-how—it’s an
ongoing attitude of flexibility, curiosity, and calm. The “wealth-
wisdom” mindset is about balancing the need to act (adjust, diversify,

hedge) with the wisdom not to overreact at every headline.

• Alternative Strategies: Managed funds or listed products regular investment contributions, or simply promising not
that employ absolute return or market-neutral strategies, to check one’s super balance daily!
offering steady returns regardless of market direction.
3.5 Case Examples
3.2 Currency Risk: Shielding Your Assets Let’s meet two hypothetical investors:
Currency risk is the silent driver of portfolio performance • Rachel, 47, Sydney: She diversified her super by adding
in volatile times. As Firstlinks reports, the AUD has notably an international equities fund and a listed infrastructure
shifted in tandem with global risk appetite, and sharp moves trust. Over the past five years, she’s seen her portfolio’s
in the US dollar can either erode or boost overseas returns volatility drop even as both asset classes have outper-
overnight. formed cash and Aussie shares during periods of curren-
To manage this, investors can: cy instability.
• Choose Currency-Hedged Versions of international funds • Liam, 38, Melbourne: By moving part of his portfolio into
to smooth the impact of exchange rate moves. a currency-hedged global ETF, Liam significantly reduced
• Actively Monitor Exposure and, if comfortable, use sim- the whiplash from a falling AUD during the US dollar’s
ple options strategies or contracts for difference (CFDs) downturn, and kept enough money in a high-yield sav-
for larger portfolios. ings account to take advantage of market dips.
• Accept Some Fluctuation in pursuit of higher returns,
but ensure that unhedged bets are deliberate, not acci- Both cases highlight the power of strategic, not emotion-
dental. al, response to global uncertainty.
Wealth Factory encourages a mindful approach: “While
perfect hedging is impossible, using available tools can Philosophy Meets Practice: The Wealth-
make a significant difference to preserving wealth.” 4 Wisdom Mindset
Adapting to Change
3.3 Liquidity: Keeping Powder Dry Financial resilience is more than technical know-how—
In volatile scenarios, access to cash or near-cash assets it’s an ongoing attitude of flexibility, curiosity, and calm. The
is invaluable. It isn’t just about emergency needs; it’s about “wealth-wisdom” mindset is about balancing the need to act
being able to respond when markets swing dramatically. (adjust, diversify, hedge) with the wisdom not to overreact
• Maintain enough cash or liquid reserves to cover at least at every headline.
six months of essential expenses. As the RBA’s latest review emphasises, Australians bene-
• Consider high-interest online savings accounts, fit by remaining “engaged and informed, but not panicked,
short-dated term deposits, or even money market funds. by the waves of global monetary change.”
• Avoid being “fully invested” at all times; markets often
present attractive entry points during times of panic or Continuous Learning
dislocation. Markets evolve; so should individual strategies.
Successful investors read widely, seek professional ad-
3.4 The Psychology of Discipline vice when needed, and make adjustments thoughtfully.
Staying the course during financial storms is easier said Academic research—from the CFA Institute to behavioural
than done. Emotional reactions—panic selling, chasing economists—consistently finds that periodic review and
fads—have derailed even the best-laid plans. minor tweaks vastly outpace wholesale overhauls after
JoyRulez, drawing on research from behavioural finance, market shocks.
reaffirms: “A disciplined, goal-driven approach outperforms
hasty, reactive decision-making in the long run.” This may Community and Professional Guidance
mean setting auto-rebalancing triggers, committing to While personal responsibility is central, don’t go it alone.

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