What investment product options are available?
With so many investment products to help you grow your wealth, you’ll need help to find the right one for you. Consider some of the following products available to help you move towards achieving your financial goals.
There’s a range of investment products available to you. A VFS Financial Adviser can help you choose an appropriate solution for your situation.
Term deposits and savings and investment accounts
Term deposits and traditional savings and investment accounts can provide you with a competitive interest rate for short term investing with little risk.
Shares generally represent part-ownership in a company. By owning shares, you share in that company's performance through the payment of dividends or through capital growth in the value of those shares. Direct ownership of shares can have tax advantages due to the imputation credits associated with franked dividends.
Managed funds enable you to invest in shares or other assets chosen by professional analysts. By investing in managed funds, you can add regularly to your portfolio, diversify your investments, and receive simple, consolidated tax reporting.
Managed accounts work a lot like a managed fund, allowing you to invest in shares or other assets chosen by professional analysts. The difference is that instead of pooling your investment with other unit holders, you have direct ownership of the underlying assets. This can provide transparency and possible tax benefits, as any dividend payments and associated imputation credits will be paid directly to you.
Wrap platforms "wrap" your investments together, offering you a single point of access to a wide range of investment options, such as an extensive selection of wholesale managed funds and direct shares including ASX listed CHESS sponsored securities.
A key feature of Wrap products is consolidated reporting - with everything in the one investment Wrap account, you get access to a range of reports for your individual investments, or your entire investment Wrap portfolio together.
Wrap options are also available in relation to your super and pension investments.
Superannuation is a tax effective environment in which you can save for your retirement. It can be quite complex and it is important to know that your super is working effectively for you so that you maximise your income in retirement.
The investing concepts relating to general investing also apply to superannuation. There are added considerations when making contributions to your super, accessibility, and what super fund is appropriate for you.
Investment/Insurance Bonds enable you to invest in shares or other assets chosen by professional analysts. The bonds have various managed fund investment options to chose from. You can add regularly to your portfolio, diversify your investments, and receive simple, consolidated reporting. The main difference between Investment Bonds and Managed Funds is the tax treatment of the fund. If you invest in a bond for longer than 10 years and adhere to the product rules, the proceeds of your fund will be Capital Gains Tax Free.
The major categories of investments are:
Each of these categories have different pros and cons and will suit different objectives. Often a combination of these may be recommended.
INVESTING IN CASH:
Cash investments such as term deposits and traditional savings and investment accounts can provide you with a competitive interest rate for short term investing.
Low risk, short term goals. Flexible solution and quick access.
Historically, cash return is more stable. Significantly lower returns than other asset classes.
INVESTING IN PROPERTY:
One of the largest investments many of us make is our own home, and it often forms a foundation for building wealth. Buying an investment property can also help grow your nest egg because it has the potential to generate both ongoing rental income to help cover costs as well as a capital gain (i.e. profit) in the longer term.
Longer term, more conservative investment. Investment properties can generate income in the form of rent, as well as capital gain and potential tax benefits.
Reduced flexibility - if you find you need access to assets quickly you would need to sell the property which may take some time.
INVESTING IN EQUITIES:
'Equities' refers to investments in shares or stocks such as through broking or managed funds.
Longer term, more aggressive investment. Historically higher returns. Has the potential to generate income in the form of dividends, as well as capital gains.
Greater volatility and increased shorter term risk.
INVESTING IN SUPERANNUATION:
Superannuation is a tax-effective vehicle that you can use to save for your retirement. Your employer generally makes your super contribution and you can increase or accelerate the value by making extra contributions.
Investing for your retirement. Tax effective investments.
Super contributions are generally not accessible until retirement age.
Navigating a path to long-term investment success isn’t always easy. It requires a patient and disciplined investment approach alongside a well-crafted plan to help guide the way. The Vanguard Index Chart tracks the 30-year investment performance of major asset classes and highlights key economic, social, political and demographic changes. Looking at markets over this longer time period supports some key philosophies that can help investors map a successful path to investing. This chart reaffirms the principles that growth investments such as Shares and Property usually outperform defensive investments assets including Cash or Term Deposits. This document also reaffirms the importance of having a well diversified investment portfolio and 'not having all of your eggs in the one basket'. The link below will take you to the flyer discussing the information above.
Click on the link below to use the Vanguard Interactive Chart. This chart has investment performance information dating back to 1970 and you can obtain the performance of various investment assets over any time period between 1970 and 2013.
There are so many ways you can look at investing – from reviewing your superannuation to good old saving – but if you are looking at growing your wealth over the long term, there are some good tips to consider.
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