Page 10 - Wealth-Adviser-Issue-118 (FWP)

ISSUE 118
AUGUST 2025

Research emphasises that property diversification across against potential returns
sectors and geographies significantly reduces single-asset • Regular monitoring and rebalancing as market conditions
risk and enhances income stability compared to concentrated evolve
residential property holdings . This diversification benefit
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becomes particularly valuable during economic transitions The evidence suggests that diversified income strategies
when different property sectors may perform differently. can deliver 3–5% additional yield over traditional cash-fo-
cused approaches, whilst providing superior protection
Constructing Your Resilient against various economic scenarios .
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5Income Framework Professional guidance becomes particularly valuable in
Building a resilient income portfolio requires un- navigating:
derstanding how different income sources interact and • Regulatory compliance for self-managed superannuation
complement each other across various economic scenarios. funds
Financial advisers play a crucial role in helping retail clients • Tax-effective structuring to maximise after-tax income
integrate these diverse strategies into a coherent investment • Risk assessment across different alternative investment
framework. options
• Portfolio integration ensuring strategies work together
Portfolio Construction Principles effectively
for Resilient Income
Income Source Diversification: Rather than relying on a sin- Conclusion
gle asset class, successful income portfolios blend multiple Australian retail investors face an evolving income
sources: landscape that demands strategies beyond traditional bank
• Defensive income from government bonds and cash for deposits and government bonds. By understanding alter-
stability native credit opportunities, inflation-protected real assets,
• Alternative credit for enhanced yield with moderate and diversified property strategies, investors can construct
additional risk portfolios that provide both attractive income and protec-
• Real assets for inflation protection and long-term capital tion against various economic risks.
preservation The key to success lies not in chasing the highest ad-
• Property strategies for diversification and potential vertised yields, but in building a balanced framework that
growth delivers sustainable income across different market con-
• Equity income for tax-effective returns and capital appre- ditions. Working with qualified financial advisers ensures
ciation potential these strategies align with personal circumstances, risk
tolerance, and long-term financial goals, ultimately deliver-
Risk-Return Balance: Each income source carries different ing both income security and purchasing power preservation
risk characteristics: for years ahead.
• Credit risk varies from government guarantees to corpo-
rate lending standards
• Interest rate sensitivity differs between fixed-rate and References
floating-rate instruments • Firstlinks (2025, August 6). Finding income in an income-starved world.
• Liquidity profiles range from daily access to multi-year • Morningstar Australia (2025, February 18). 3 factors that enable
investment periods financial advisers to improve returns by 3%.
• Inflation sensitivity spans from direct CPI linkage to • Perpetual Limited (2025, April 6). Michael Murphy: Why it’s a good time
inflation-exposed assets to be in private credit.
• Remara Asset Management (2025, May 3). Self managed super fund
Implementation Considerations: Practical portfolio con- investment strategy.
struction involves: • Australian Investment Council (2024). Private Credit Fact Sheet.
• First Sentier Investors (2024, February 14). Infrastructure positioned to
• Asset allocation based on individual risk tolerance and outperform in 2024.
income requirements • FIIG Securities (2025). Inflation linked bonds.
• Tax efficiency through appropriate investment structures • The Motley Fool Australia (2025, January 31). Which ASX REIT will pay
and account types the best dividend yield in 2025?
• Liquidity management ensuring adequate access to funds • Centuria Capital Group (2023, June 5). Why property diversification is
for planned expenses important and how to achieve it.
• Cost management balancing active management fees • Hub24 (2023, March). An Adviser’s Guide to Managed Portfolios.

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