As we move into April, and hot on the heels of the recent Federal Budget, Prime Minister Anthony Albanese has announced a national election for May 3 – kicking off an April campaign centred on tax cuts and cost-of-living relief.
Meanwhile fears of inflation in the United States and alarm about unpredictable and escalating tariffs saw sharp falls on Wall Street during March, particularly in the final week.
In Australia, the events in the US, conflicts in Ukraine and the Middle East and the start of the federal election campaign have all made their mark. The S&P/ASX 200 reacted with an almost 5% drop during March.
The Australian dollar, in the doldrums all year, improved slightly during the month before ending lower at around 63US cents.
Economic growth was up 0.6% in the December quarter and 1.3% for the year and household wealth climbed 0.9% in the same period.Inflation rose 2.4% in the 12 months to February, a slight softening from the previous month’s increase of 2.5%.
Consumer sentiment recorded a 4% rise in March, according to the Melbourne Institute and Westpac Bank Sentiment index. The RBA’s decision to cut interest rates in February and a further easing in cost-of-living pressures have provided a clear lift.
Market movements and review video – April 2025
Stay up to date with what’s happened in the Australian economy and markets over the past month.
Following March’s Federal Budget, Prime Minister Anthony Albanese announced a national election for May 3, kicking off a campaign centred on tax cuts and cost-of-living relief.
Globally, trade war worries dominated headlines and contributed to markets falls during the month.
Click the video below to view our update.
Please get in touch if you’d like assistance with your personal financial situation.
How $10,000 performed across eight asset classes in 2024
Another year of varied returns demonstrates the importance of diversification.
Global share markets surged into record territory during 2024, delivering double-digit returns to many investors.
Indeed, investors using broad-based exchange traded funds (ETFs) to cover the largest companies on U.S. and international share markets would have ended the year with significant gains.
By contrast, total gains from the Australian share market were more subdued. However, they were still above 10% for the year and well ahead of the returns from many other asset classes.
The table below draws on data from the Vanguard Digital Index Chart to show what a $10,000 investment into eight major asset classes at the start of 2024 would have grown to by the end of 2024.
| Asset class | Dollar value at the end of 2024 |
2024 total return (%) |
| United States shares | $13,778 | 38.8 |
| International shares | $13,118 | 31.2 |
| Australian listed property | $11,850 | 18.5 |
| International property | $11,190 | 11.9 |
| Australian shares | $11,144 | 11.4 |
| Cash | $10,447 | 4.5 |
| Australian bonds | $10,293 | 2.9 |
| International bonds | $10,185 | 1.8 |
Source: Vanguard.
Note:Returns data measured from 1 January 2024 to 31 December 2024.
Past performance is not a reliable indicator of future performance.
The projections above indicate how much could have been accumulated if it were possible to invest directly into the relevant indices. They assume the $10,000 is fully invested (and remains fully invested) in the relevant index for the asset class and that all income is reinvested. They do not make any allowance for fees, costs or taxes. All results are displayed in nominal dollars, i.e. inflation has not been taken into account.
An actual investment would be subject to acquisition costs, fees and taxes.
The figures are based on assumptions and are general illustrations only.
A diversified portfolio allows you to adapt to changing market conditions and economic environments.
What’s obvious from the data is that there was a massive gap between the return from the best-performing asset class (U.S. shares) and the worst-performing (international bonds).
Yet, as is so often the case, last year’s best-performing asset class may not be the best performer in the following year. And that highlights the importance of being diversified across multiple asset classes as a key strategy for building a robust and resilient investment portfolio.
Seven key benefits of diversification
1. Risk reduction
One of the primary advantages of diversification is the reduction of risk. By spreading your investments across different asset classes, you minimise the impact of a single asset’s poor performance. For example, while U.S. shares saw a solid return of 38.8%, international bonds only returned 1.8%. If you had invested all your money in international bonds, your returns would have been much lower. Diversification ensures that even if one asset class underperforms, stronger performers can help lift your overall investment return.
2. Stability and consistency
Diversification helps to smooth out the volatility of the market. By investing in a mix of asset classes, you may achieve more stable and consistent returns over time. This is particularly important for long-term financial goals, such as retirement. For instance, while U.S. shares and international shares provided high returns, Australian listed property and Australian shares also contributed positively to the portfolio, offering a more balanced approach.
3. Opportunities for growth
Different asset classes can perform well at different times. By diversifying, you could increase your chances of capturing growth opportunities and ensures you are not missing out on potential gains from asset classes you have avoided.
4. Inflation protection
Some asset classes, such as real estate, can act as hedges against inflation. When the cost of living rises, these assets often increase in value, helping to preserve your purchasing power. Australian listed property, which can be seen as a proxy for real estate, provided a solid return of 18.5% in 2024.
5. Flexibility and adaptability
A diversified portfolio allows you to adapt to changing market conditions and economic environments. You can adjust your asset allocation based on your risk tolerance and financial goals, ensuring that your investments remain aligned with your needs. For example, if you are nearing retirement, you might shift more of your portfolio into bonds and cash to reduce volatility risk.
6. Enhanced return potential
While diversification doesn’t guarantee higher returns, it can potentially enhance your overall return by taking advantage of the strengths of different asset classes. In 2024, a diversified portfolio that included U.S. shares, international shares, and Australian listed property would have seen significant growth, outperforming a portfolio concentrated in a single asset class.
7. Emotional comfort
Knowing that your investments are spread across various asset classes can help you avoid the stress and anxiety that come with putting all your eggs in one basket, making it easier to stick to your long-term investment strategy. For instance, the more consistent returns from cash and Australian bonds may provide a sense of security when more volatile assets such as shares experience volatility.
Conclusion
The data from 2024 clearly demonstrates the power of diversification.
By spreading your investments across different asset classes, you can reduce risk, achieve more stable returns over the long term, and potentially increase your chances of capturing growth opportunities.
Whether you are a seasoned investor or just starting out, diversification is a strategy that can help you build a resilient and balanced portfolio, ultimately contributing to your financial success and peace of mind.
Important information
Diversification is no guarantee of investment success or loss avoidance. A diversified portfolio could produce negative returns if markets fall. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your portfolio. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of incomeThis article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™ GENERAL ADVICE WARNING Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966). The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”). We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions. Important Legal Notice – Offer not to persons outside Australia The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws. © 2024 Vanguard Investments Australia Ltd. All rights reserved.
Turn your financial goals into an investment plan
A well-thought-out investment plan can help you thrive financially as well as protect you from falling into some common behavioural investment traps. But how do you create an investment plan? And where do you start?
Start with financial goals.
Studies show that people are more successful when they set goals for themselves. Whether it be funding your retirement lifestyle, paying education expenses or a must-do holiday, setting specific goals can keep you on track.
You can translate these goals into an investment plan with 4 questions.
1. How much do I need?
You’ll want to have an amount to work toward, so do some research to figure out what your goal will cost. Try and set realistic expectations based on both your current financial situation and future plans.
2. When do I need it?
Most savings goals will have some flexibility, but it’s still a good idea to have a target date in mind. This will hold you accountable—and give you the motivation to stay on track.
For example, your goal could be saving up for a first-home deposit in five years or saving for a comfortable retirement over the next 30 years. This allows you to figure out what percentage return you need to generate annually in order to reach those goals– a definite reality check.
Your goals coupled with the dollar amount you wish to achieve and when you would like to achieve it by can be a powerful motivator for spending and investing discipline.
3. What will it take to meet my deadline?
It’s easy to estimate how much you’ll need to put away to reach your goal by your target date. Just take the total amount you want to save and divide it by the number of months (or weeks, or years—however often you plan to contribute money) between now and your deadline.
Along with understanding your goals, you should also understand what resources you currently have and what constraints there may be:
- Your monthly income and your expenses.
How much can you contribute on a regular or periodic basis? While it might seem straightforward, setting a budget and sticking to it is fundamental.
- Your attitude to risk.
Everyone has a different approach to investment risk but knowing how much market fluctuations you can withstand means you can choose investments that align with your risk appetite.
Other constraints can include costs of investing, exposure to taxes, liquidity needs and ethical values..
4. How should I invest my money?
Investing can help you achieve your financial goals more quickly. However, the investments you choose should be tailored to your specific situation.
There are numerous investment options, each with its own level of risk and potential return. Understanding these options and how they complement each other can empower you to make well-informed decisions about where to allocate your funds.
Asset allocation refers to the way in which a portfolio is divided between asset classes or investment type, such as growth assets like shares and defensive assets like cash or bonds. This strategy is crucial for determining your portfolio’s long-term performance and can help mitigate volatility.
You can either build your own portfolio of investments or opt for an all-in-one ready-made, diversified portfolio that aligns with your individual risk tolerance.
Finally, decide on monitoring frequency
Periodically monitoring and evaluating a portfolio relative to savings targets, return expectations and long-term objective is an important part of investing. But be careful of over-monitoring and adjusting asset allocations based on short-term market movements.
Your portfolio value will fluctuate daily; it will go up and down by the hour. By deciding at the outset how often you will check your portfolio and rebalance, you can more easily avoid unnecessary stress or the temptation to time the market and day trade.
One of Vanguard’s key principles for investment success is to adopt a long-term view and to stay the course. This means maintaining perspective and sticking to your investment plan, even in periods of market uncertainty.
Speak to us if you’d like to start investing.
Important Information
Any investment is subject to investment and other known and unknown risks, some of which are beyond the control of Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) , including possible delays in repayment and loss of income and principal invested. Please see the risks section of the PDS for the relevant VIA product for further details. No Vanguard company, nor their directors or officers give any guarantee as to the performance or rate of return of any Vanguard product, amount or timing of distributions, capital growth or taxation consequences of investing in the relevant product. This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™ GENERAL ADVICE WARNING Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966). The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”). We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions. Important Legal Notice – Offer not to persons outside Australia The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws. © 2024 Vanguard Investments Australia Ltd. All rights reserved.
