Investing in cash and fixed interest. This forms a pivotal part of the defensive part of your portfolio.

An under allocation to cash, might mean that your over exposed to volatility of your portfolio is above your comfort level.

An over allocation however might mean your investment portfolio may only keep pace with inflation.

There are different types of defensive assets you can invest in, for example:

• Cash
• Term deposits, with either the bank or the government
• Or you can even invest in Managed funds, which gives you exposure to domestic fixed interest and also international fixed interest.

As your situation changes you need to re-allocate the portion you have in the defensive potion of your portfolio.

As an example:

If you are approaching retirement you need to gradually increase what you have in cash and fixed interest, were as if you are in the Wealth accumulation stage you probably want to have the bulk of your assets in the growth portion of your portfolio.