INVESTMENT - MAKING DOLLARS OUT OF SENSE

Investing- Making dollars out of sense

Many people believe that investing is only for the rich. This is far from true - you don't have to be wealthy to be an investor. In fact, investing is an effective way to create wealth.

Put simply, investing involves putting your savings to work, thus helping you achieve your financial goals sooner. Wisely selected investments can help meet your financial needs by increasing your wealth, providing you with an income or both.

You've worked hard for your money. By investing it, you can make it work for you.

What's wrong with leaving my money in the bank?

Whilst keeping your money in a bank account is a good choice for emergency funds, it rarely is the best choice for long-term savings.

Although bank accounts are secure, the real value of your money may decrease over time because inflation can erode its purchasing power.

Your money needs to grow at a greater rate than inflation in order to resist erosion. That's why the careful investment of your money is so important.

What other investment options are available?

If investing your money in a bank over the longer term isn't appropriate, what are the alternatives?

Fixed interest
Many investors believe the fixed interest sector consists solely of investing in bank term deposits. However, fixed interest investments actually come in many forms, including government bonds, treasury notes, debentures, fixed interest trusts, hybrids, etc.

Property
Investing in property isn't confined to owning your home or even a rental property. You can purchase directly or, alternatively, invest in a property trust. Investment properties can include industrial, commercial, residential, retail, rural and tourist properties.

Shares
Put simply, purchasing shares gives you part ownership in a company and the opportunity to benefit from its growth through the payment of dividends and increase in share price. As with property, you can purchase shares directly or through a managed fund.
Although the share market is characterised by volatility, over the past 20 years, domestic (Australian) and international shares have consistently outperformed all other investment sectors.

How can I invest directly?
Investing directly means you have full control over your investment choices. This investment approach is more cost-effective and provides greater level of control and flexibility from a tax management perspective. However, direct investment is not a set-and-forget strategy and active portfolio management is imperative. Professional expertise with access to in-depth market research and vast knowledge of investment markets is strongly recommended.

Managed funds
When you invest in a managed fund, you're issued with a number of units. These units represent your ownership in the fund.

The benefits of investing in a managed fund include:

  • The opportunity to diversify your investments with a relatively small amount of money;
  • Access to assets which would normally be beyond your reach, such as an overseas company or a large shopping centre; and
  • Having your investments professionally managed.

Are there risks involved with investment?
There's no such thing as a risk-free investment; risk and return are always linked. As a rule, the higher the risk, the higher the potential return.

When selecting investments, you need to strike a balance between the risk you're prepared to accept and the return you want. This is a very personal decision.

How can I minimise the risk?
There are ways of minimising the risk whilst still getting a good return on your investments. Diversification, for example, is the technique of spreading your money across different investments in order to reduce risk - in other words, 'not putting all your eggs in one basket”.

For more investment information or to discuss how best to make your money work harder for you, contact AUGEO Wealth Management today on 02 9884 8404 for a confidential risk-free financial analysis.


Political shenanigan in an election year will ensure no enonomic recovery in the US until 2013 | Europe will unwillingly accept its economic reality, Eurozone will face structural change as peripheral countries finally default leaving bond markets in chaos | China will move to slow its economy to avert economic meltdown as export-led recovery fails to materialize. This will impact the resources boom in Australia, lead to higher unemployment and potential recession spurred by weak manufacturing and retail