One of the first things a financial adviser would tell you is that if you want to secure your future, then you must be ready to save and invest your savings. Investment allows you to put aside some of the resources that you have now and allow it to work for you so that at a later date, you would have access to a lot more than you do now. That is basically what investment is all about.
However, there are some principles guiding investment. You need more than just good luck to be a successful invest, you need extensive knowledge of the principles of investment to succeed.
If you live in Australia or you are a foreigner thinking of investing in Australia, there are a lot of reasons why it is a good idea to do so. First, foreign direct investment has continued to increase in Australia over the years and this has drawn a lot of people to the market. Australia also boasts of very strong economic credentials with steady growth yearly. Another thing that works in Australia’s favor is its political stability; Australia has one of the most politically stable economies in the world today.
Australia also has reasonable tax policies which is a major attraction for investors and business owners. So if you are considering investing your money in Australia; it’s a win-win situation for you.
But how do you invest your money in Australia? There are different types of popular investment options available for you, some of which would be discussed in details below.
If you are not really an expert in investment or you have never invested in Australia; then this may be the safest investment option for you. Managed funds involve having your money pooled together alongside other investors by a professional known as the investment manager.
The investment manager would then take investment decisions on your behalf and buy shares and stocks as he deems fit. At the end of the day, you would be paid interest according to the amount you have invested. To buy a managed fund, you can do so online or by approaching a financial advisor.
To invest in managed funds, you would first need to find the most suitable one for you as there are thousands of them. You can pick one that invests in an industry that you prefer or believe in. Next, you should consider the risks involved with the type of investment option you have chosen. One basic principle to guide you is that investments that provide higher rate of returns usually have the highest risks and vice versa.
You should also look into the investment time frame to have an idea of when your investment would yield and how inflation may affect the returns on investment. To invest in managed funds in Australia, you would need at least $1,000 and you would also be required to pay some fees like entry fees which is between 1% and 5% of your initial investment amount, contribution fees, management expense rations, performance fees and advice service fees. All these fees are typically between 0.5% and 5% depending on the investment options you settle for.
This is also a very safe and reliable way to invest your funds in Australia. It involves buying a stake or a percentage of ownership of a person’s business. Shares are usually better for people who are interested in long term investment as they may not go good investment options for people who are looking into short term investments.
Shares may be in the form of equities, securities or company stocks and the investors stand to benefit from the dividends paid over time and potential capital gains. However, investing in shares has its own downsides too.
The values of shares have the tendency to drop drastically causing investors to their money. Also, there is the risk that a company may go broke and that would also lead to a loss of investments.
To buy shares in Australia, you would have to go through a stock broker who would give you professional advice on the best shares to buy but the onus still falls on you to carry out a proper research in order to determine which shares have higher potential and offer lower risks. You should also consider building a diversified portfolio of different types and categories of stocks in order to lower your risks.
This is also a very popular and safe form of investment albeit one that requires a lot of funds. It typically involves buying/building a property for the purpose of renting it out to others. The rent which you would continue to collect over a long period of time is considered as your return on investment.
Investing in real estate has a lot of benefits including the fact that you could also use your property as collateral for loans but it is also very risky because it offers poor diversification hence, your eggs are put together in one basket. If you want to invest in real estate, it is more advisable to do so alongside other types of investment options.
You should also talk to investment property advisers who would properly guide and advice you on the best places to invest in property in Australia.
You can also invest in interest paying investments in Australia. This type of investment typically involves lending your money to a company and getting interests for it. There are different types of such investments such as -:
This involves fixing your money mostly in a financial institution over a specific period and getting a fixed interest on your investments at the end of the day.
Bonds typically involve lending out some money to companies for use over a specific period and getting some interests at the end of the day. You can buy bonds from the Australian government or from corporate bodies in Australia.
Other interest bearing investments include unlisted debentures, secured & unsecured notes, unlisted mortgage schemes and Mezzanine investments.