Factor in lower rates of return

Factor in lower rates of return. Over the past two decades, Australia's exposure to China has increased massively and sparked our first trade surplus outside recessionary periods for several decades, a once in a century mining investment boom and a huge surge in out terms of trade. However, all these trends are now working against the domestic economy and it is hard to see while these booms unravel what can be done to boost domestic growth towards trend outside infrastructure investment. Australian growth is likely to remain below-trend for the next two years even though interest rates are at historic lows and the Australian dollar has come down. While a subdued economy sounds somewhat uninspiring for investors, considering previous mining busts have ended in recession and double digit unemployment the current growth profile is welcomed. What can investors do in this world? Firstly remain focused on valuations, then broaden your investment universe, reduce your exposure to historically expensive government bonds and most importantly factor in lower rates of return from all assets for the next few years.