All of us deserve a well-funded retirement, but sometimes we need additional funds long before our retirement age and it’s good to know that we have the financial resources when they are needed.

Maybe you are having another baby or you want to help your kids purchase their first car or first home? This is when an investment portfolio can come in handy, because you can leave it to build until you retire or you can withdraw some of the funds on as as-needed basis.

What do you need to know about investments?

One of the main points to understand about investment portfolios is that nothing is guaranteed. People have lost everything by making the wrong decisions concerning their investments, so you must obtain sound financial advice before deciding what to do with your money.

Having said that, one of the best pieces of advice is to diversify your investments, because all the asset classes (investment types) react differently to fluctuations in the market place. One asset may show a positive return, whilst another might drop in value, but over the longer term, you should be looking for consistent returns overall.

So what are your investment options?

In general, there are four asset classes: cash, fixed income, property and shares.

Cash: This can include the money you have in your normal account at the bank, as well as in a term deposit. It’s always good to have some easily accessible cash on hand, but if you are looking for a good return on your investment, cash gives the lowest return out of the four asset classes.

Fixed income: These are bonds issued by governments and corporations who want to raise money for their endeavours. You purchase these bonds (essentially lending the government or corporation your money) and they promise to return your money plus a fixed interest on a certain date. The yield from these bonds is usually slightly higher than with cash, but it’s still a fairly low return, however many Aussies like bonds because they tend to be less risky than property or shares.

Property: Whilst we all know that the property market fluctuates over time, this asset class generally offers a positive return on your investment over the longer term. If investing in property is something that you would like to explore, you can either buy the property yourself or use a property management fund to oversee your investments. Whichever option you decide, you can choose between residential, commercial and industrial property, with residential offering the best capital growth, whilst commercial or industrial properties offer higher rental returns than capital growth.

Shares: To receive good returns in the share market, you really need to understand the markets well. This asset class is not for the faint-hearted, which is why most Aussies invest their money with a managed fund rather than going it alone. Serious money can be made and lost in the share market, but if you are in it for the long haul, you should see positive returns on your investment, if you have chosen a good fund manager.

As I mentioned earlier however, nothing is guaranteed, so you need to have a diversified portfolio that is designed to give you the best return on your investments, given both your risk tolerance and your age.

Why not make an appointment to explore your options for a diversified investment portfolio? Call me (Amanda McCall) on 07 3356 6929 or book your appointment online.

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