Investments

If you’d like your money to start working for you, it’s time to learn about investing. Everyone has different needs and circumstances but here are some basics to consider. Of course, we recommend you contact us before you start putting your money into any form of investment. 

What are your goals?

Start by setting your investment goals. Since each investment will vary in its potential for risk and returns, you need to choose the right investments to help you achieve your goals:

• short-term goals—like saving to pay for a car or holiday in the next six months to two years
• medium-term goals—what you want to achieve in the next two to five years, like starting a business
• long-term goals—if your goal is more than five years away, like saving for a child’s education.

Investment strategies

As a potential investor, you can be exposed to many investment promotions every day. That’s why it’s important to understand the basics of investment strategies.

These include principles like diversification and dollar cost averaging, designed to help your investments work to achieve your goals.

Choosing the right investment option

Invest some time in making the right choices

Once you’ve put some thought into your short, medium or long-term investment goals, it’s time to look into your investment options. Certain types of investments, or asset classes, may help you reach your goals in a way that suits you.

When considering different investments, consider some key points.

Your risk tolerance

Your risk tolerance is affected by two key factors: the amount of time you have to invest and your attitude to risk.

It’s true that every investment involves some risk, but some are generally more unpredictable or volatile than others.

If you have a long-term goal, you may have time to ride through the market’s ups and downs and thereby even-out the impact of risk on your investment.

On the other hand, if your goal is short-term, you may choose to take a more conservative approach, because you won’t have the luxury of time.

But if you’re comfortable taking risks and you have big investment goals, you may decide to invest in riskier options. If you’re a conservative investor, you’re likely to prefer safer investment options, even over the long term.

The type of investment

Your risk tolerance will influence the type of investments you make:

Investment type (asset class) – General risk-return level
Cash (savings accounts, term deposits) – Low risk, possibly low returns
Fixed income (bonds, annuities, mortgage funds) – Low risk, investments can be linked to inflation rate
Property (buildings, land, factories) – Moderate to high risk
Equities (Australian / International shares) – High risk due to numerous economic and global factors

We’ve covered some basic types of investments, but you could also consider:

Investment / Education bonds—They’re flexible, tax-effective investments for medium to long-term goals. You can invest a single lump sum or make regular contributions to build your wealth.

ETF’s – An Exchange-Traded Fund (ETF) is an investment product holding diverse assets like stocks or bonds. Key features include:

1. Diversification: Instant risk spread across various securities.
2. Liquidity: Tradable on stock exchanges throughout the day.
3. Transparency: Daily disclosure of holdings for investor clarity.
4. Cost-Efficiency: Often lower expense ratios than mutual funds.
5. Flexibility: Exposure to diverse assets like equities, bonds, commodities.
6. Traded on Exchanges: Bought and sold like individual stocks.
7. Intraday Trading: Unlike mutual funds, tradable at market prices anytime.

ETFs are favored for their versatility, cost-effectiveness, and ease of stock market trading.

Separately Managed Accounts (SMA)

A Separately Managed Account (SMA) is an investment account managed by a professional investment manager on behalf of an individual investor. Key characteristics include:

1. Individual Ownership: Each investor has a separate, distinct account, providing individual ownership and customization.
2. Professional Management: SMA is managed by investment professionals who make personalized investment decisions based on the client’s objectives and risk tolerance.
3. Transparency: Investors can typically see the individual holdings within their SMA, offering transparency and visibility into their portfolio.
4. Customization: SMAs allow for customization, enabling investors to tailor the portfolio to their specific needs, preferences, and restrictions.
5. Tax Efficiency: Investors may have more control over tax implications as they directly own the underlying securities, potentially allowing for more tax-efficient management.

SMAs offer a personalized and transparent investment approach, making them suitable for investors seeking individualized management and control over their

Managed funds—Your money is pooled with that of many investors and invested across a range of asset classes and managed by a trustee or professional fund manager.

Investing in property through a managed fund or super fund—This could give you exposure to a wide range of properties in Australia and overseas, which provides you with investment diversification so not all your eggs are in one basket.

To discuss your Investment needs please contact one of our qualified Financial Advisers at Depth Financial Advice on 0403 439 999.