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There are many investment options available, whether
it be investing directly in cash, shares and property
or using a managed fund to invest in a combination
of asset classes.
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Finding
the most effective way to structure your investments
can often be challenging. Following are the few
ways to invest your money :
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CASH AND FIXED INTEREST
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Cash
investments contribute to a well-balanced portfolio
by reducing your overall risk, and provide ready
access to money. They typically provide a low
return over time and offer no scope for capital
growth. Cash is suited to investors with a short-time
horizon. Fixed interest investments are generally
regarded as a relatively low risk investment,
and have historically provided lower returns than
shares and property. They pay a regular interest
income guaranteed for the term of the investment,
which can be appealing in times of uncertain market
performance.
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Fixed interest is best suited to investors
with a short to medium time horizon, where the
investor would not have immediate requirement
of the funds, but would have a stable interest
income. Incorporating cash and fixed interest
within your investment portfolio can help to
reduce the impact of market fluctuations, whether
you invest directly into these products or via
a managed fund.
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PROPERTY :
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Property investment can be profitable, however
is susceptible to fluctuations in market demand.
Investors wishing to enter the property market
can do so via property investment loans, or
by using the equity in their own home.
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Another way to enter the property market is
by incorporating property trusts into a managed
fund portfolio. Property trusts typically invest
in commercial, retail and residential properties,
which would otherwise be out of reach for most
individuals.
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Property is generally a moderate risk investment
and is best suited to investors with a long-term
investment timeframe.
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MANAGED FUNDS
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Managed funds pool together investment funds
from many investors and then invest the total
amount across a range of asset classes - ranging
from shares, listed property trusts, bonds and
cash. By using different mixes of these asset
classes, a portfolio can be designed to meet
your individual investment objectives. Managed
funds can be used to invest a single lump sum
or by investing smaller regular amounts as part
of a regular investment plan to reach your short,
medium and long-term goals.
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Benefits
of investing in managed funds include: |
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- Only a small
investment is needed to start. |
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- Access to markets such as international shares
and large scale property developments that may
not be achievable as a sole investor.
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- Fund manager carries
out day-to-day administration and investment research. |
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- Diversification
across a range of asset classes and fund managers.
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BORROWING TO INVEST
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A faster way to grow your investment portfolio
is by borrowing funds to invest or gearing.
Borrowing to invest is a strategy that can help
increase the size of your investment portfolio
and potentially magnify your investment returns.
Remember that gearing potentially amplifies
your gains as well as your losses, therefore
seek professional advice before implementing
a gearing based strategy.
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INVESTING IN SUPERANNUATION
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Another way to invest in a managed fund is
through superannuation. If your goal is to build
money for retirement, or if you are looking
for a tax effective investment until you are
ready to retire, this may be more suited to
your needs.
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