Most real estate portfolio optimisation models are directed at investment institutions and fund managers. Individuals face similar portfolio construction decisions but their portfolios are often dominated by their family home. This paper treats the family home as an investment asset around which the owner builds a suitable portfolio. Some of the reasons for ownership, rather than renting, and the characteristics of the investment (such as the lack of diversification, the high debt ratios, the illiquidity, the transfer costs and the favoured tax status) require a special approach to selecting weightings for the other investments in a portfolio that is dominated by the family home. This paper argues that the volatility of capital returns in different suburbs over at least 5 year holding periods is an appropriate measure of risk. Using data from the Australian city of Perth, the paper explores which investment assets would have offered the best protection against poor performance of the family home as an investment. Using this approach, the evidence suggests that the composition of private investment portfolios should reflect the type of suburb, the portion of investment wealth in the home, the ownerís risk profile and investment horizon. Methods of measuring house prices over time in different suburbs have shortcomings which cast doubts over the reliability of these empirical results. However, the principal purpose of this paper is to consider an alternative method of constructing private investment portfolios that may be more useful to personal financial planners than conventional portfolio optimisation models.