What's the most conservative split of financial assets for my portfolio in today's market?


Before investing, absolutely follow the advice in mbhunter's answer.

There is no safe investment (unless you count your mattress, and even there you could find moths, theives, or simple inflation taking a chunk out of your change). There is only maximizing your reward for a given level of risk - and there is always risk.

This question should be enshrined somewhere on the Q&A site for its comprehensive list of sources for information on asset allocation. The tag is also going to have tons of good information for you.

To answer your question on what slice of the pie is devoted to what, you can check out some common portfolios given by U. S. experts for U. S. investors - these should be convertible into Australian funds.

Another portfolio that is, like all those above, loosely based on Modern Portfolio Theory for maximizing reward for a given level of risk is the Gone Fishin' Portfolio.

A common denominator amongst these portfolios is that they emphasize index funds over mutual funds for their long-term performance and preference lazy management (yearly rebalancing is a common suggestion as the maximum level of involvement) over active management. You can see more Lazy Portfolios.


This is a somewhat complicated question because it really depends on your personal situation. For example, the following parameters might impact your optimal asset allocation:

  • Income
  • Wealth
  • Expenses
  • Job Security
  • time horizon (i.e. when will you need the money)

If you need the money before 3 years, I would suggest keeping almost all of it in cash, CDs, Treasuries, and ultra safe short-term corporate bonds.

If however, you have a longer time horizon (and since you're in your 30s you would ideally have decades) you should diversify by investing in many different asset classes. This includes Australian equity, international equity, foreign and domestic debt, commodities, and real estate. Since you have such a long time horizon market timing is not that important.


You don't say your level of consumer debt. You don't say how much of an emergency fund you have.

If you have debt, pay it off before you invest. If you don't have an emergency fund (X months' expenses, pick your own X) get that before investing.

If you have neither, get a small emergency fund, and then throw as much as you can to getting rid of debt.

Beyond that, look for prudent investments. They're not the same as conservative investments.

To know what's prudent, learn about the ones you listed and what determines their prices. Learn how or why they go up or down in value.