How to invest $1 million in 2026

This discussion was recorded on the 10th of December 2025

The strong returns investors have enjoyed from equity markets extended into 2025, albeit at a more moderate pace than the bumper years of 2023 and 2024. If you’d simply held an S&P 500 index ETF for the last 3 years, you’d be looking at annual returns of around 22.8%. For Australian investors, the ASX 200 delivered closer to 9.7% excluding dividends over the same period.

That S&P 500 result is roughly double the average annual return for the past century. It’s been an exceptional period for equities - one that risks either lulling investors into complacency or creating a sense of FOMO if portfolios haven’t kept pace.

Falling interest rates, surging US tech earnings and rising valuations have provided the ideal backdrop for this run. Looking ahead to 2026, it makes sense to assess the outlook, but perhaps more importantly for investors to focus on their own return requirements rather than anchoring expectations to recent market performance.

So, what are your investment objectives?

It’s a simple question that sits at the heart of professional financial advice, yet one many investors don’t spend enough time considering.

If your long-term goal is to generate 6–8% per annum, do you need to be chasing eye-catching returns that come with higher volatility and the risk of meaningful drawdowns? 

Against this backdrop, I sat down with Ben Clark from TMS Private Wealth and Charlie Viola from Viola Private Wealth to discuss setting realistic return expectations. This isn’t about hunting ten-baggers - it’s about taking a smoother, more sustainable path to long-term wealth creation.

My two guests also share the big factors shaping their asset allocation decisions for the year ahead and where they are allocating new funds on behalf of their clients.

The big picture for 2026

Before discussing how Clark and Viola are allocating capital for the year ahead, it’s important to understand the factors shaping their thinking.

As with last year, valuations sit high on the list. After several strong years for equities, both advisers are more conscious of where markets may be pricing in optimism. For Viola, this reinforces the importance of trimming oversized positions and being selective with new equity allocations. 

Clark shares that caution domestically, noting that elevated starting valuations have been a headwind for Australian equities relative to global markets.

“The Australian market got very expensive. A lot of stocks we’d held for years were trading on multiples I’d never seen before. Valuations still aren’t cheap, but they’ve moved closer to long-term averages — and that’s one reason Australia has underperformed the US.” - Ben Clark, TMS Private Wealth

Inflation and interest rates remain the other key variables. While the direction of travel is expected to be lower over time, both advisers stress the importance of building portfolios that are resilient to delays or surprises. Rather than positioning for a single outcome, they prefer to spread risk across assets that can perform in different environments.

Finally, both point to the growing opportunity set in private markets. While public market valuations have adjusted quickly, private assets have lagged, creating opportunities to redeploy capital harvested elsewhere while improving diversification.

4 tips on setting return expectations

Viola and Clark shared the following principles to help investors set realistic return expectations - particularly after a strong run for markets.

1. Start with outcomes, not benchmarks: Both advisers emphasise that return targets should be driven by what you’re trying to achieve. Income needs, time horizon and capital preservation matter far more than beating an index in any given year.
2. Think in risk-adjusted terms: A high return is meaningless without context. Clark encourages investors to consider how much risk is being taken to generate returns, and whether that level of risk is sustainable through a full market cycle.
3. Be honest about drawdowns: Chasing higher returns increases the likelihood of larger drawdowns. Viola stresses the importance of constructing portfolios that investors can stick with during periods of volatility, rather than optimising for the best-case scenario.
4. Aim for consistency over time: Both agree that delivering high-single-digit to low-double-digit returns consistently, with a balance between income and growth, is a strong long-term outcome - even if it doesn’t make headlines.

“Returns only matter if you can stick with the portfolio through the cycle. The best strategy is the one you can actually live with when markets turn.” - Charlie Viola, Viola Private Wealth

How Ben and Charlie are investing $1 million for 2026

The tables below show how Clark and Viola are positioning portfolios heading into 2026. While these allocations are not tailored to individual circumstances, they provide a clear insight into how two experienced advisers are thinking about risk, return and diversification in the current environment.

Charlie Viola – Asset Allocation for 2026

Viola’s allocation is designed for investors with a more defensive orientation, particularly those focused on income generation and capital preservation.

Key points:

• Lower relative exposure to Australian equities
• Preference for global equities over domestic
• Limited exposure to duration in traditional fixed income
• Meaningful allocations to defensive and growth alternatives
• Low cash holding, preferring to use liquidity in the portfolio if opportunities arise 

Ben Clark – Asset Allocation for 2026

Clark’s allocation reflects a slightly higher growth bias, while still acknowledging the importance of diversification and risk control.

Key points:

• Reduced exposure to Australian equities relative to history
• Comfortable letting global equities run
• Gradual reintroduction of duration via high-quality bonds
• Increased allocation to growth alternatives
• Selective use of defensive alternatives

You don't need a $1 million to get started

The principles of investing are remarkably consistent. Whether you’re at the beginning of your journey or managing a substantial portfolio, building around clear objectives is a foundational step.

Ben and Charlie typically work with high-net-worth clients, which often means broader access to asset classes such as alternatives. But ongoing innovation from product issuers is steadily levelling the playing field. For many investors, the real missing link isn’t access - it’s clarity. Being clear on what you’re trying to achieve matters just as much as obsessing over the mechanics of how to get there.

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