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| Some advice on investment from someone who knows little on the subject. Even so, perhaps the little that I have learned might help you; at least I have nothing to gain from you, you can be sure that I am not after some cut of your hard-earned money. |
| I retired with a redundancy package and a lump sum superannuation pay-out in 2003. My wife and I consulted three investment advisers (see below) before deciding to arrange our own investments. |
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I will not advise you to arrange your own investments, as I did,
but I will warn you that if you get an investment adviser (IA) to do
it all for you it will cost you quite a lot, probably several
thousand dollars up-front, and several percent per year for as
long as they look after your investments.
If you just go to an IA and get them to write up an investment plan for you, read it carefully and see how much the IA would be getting before you agree to it. (In Australia at least, IAs have a responsibility under law to disclose this information.) If you could just go to an investment advisor and pay him/her for advice it would be fine. The trouble is that they advise you to place your money in A, B, and C, and most likely they get a cut from the people who run investments A, B, and C; and also they get a percentage of your money each year for 'looking after' it. Perhaps you can see now why I did not use an IA. I can only suggest that you come to a firm agreement with an IA; pay him/her only for the advice and services you receive. Pay an agreed hourly fee for their time, and pay an agreed fee for specific and defined work that they do for you. Make them agree, in writing, to not profit from your investments in any other way. |
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I am not going to provide specifics here. Nothing is absolutely
safe, capital growth comes and goes, markets rise and fall.
Buy yourself a book or two and study them.
PropertyProperty at least is something that is concrete, you own something that you can see and touch. However, a house does not, in any intrinsic way, increase in value. If you buy a house now, and keep it ten years, you will have that same house in ten years time, but it will have suffered a bit of wear and tear; unless you spend money on it, it will have become a bit shabbier. Yes it might be worth more in dollars, but it is still the same house, only ten years older.
If you buy broad acres you will have to look after it while you
own it. Control weeds; stock it, or have someone else run stock
on it; look after the fences; look after the water supply;
take care of fire hazards; pay council rates; etc. And, like the
house, it is still just the same piece of land when you come to
sell it, it won't grow.
Money in the bankPretty safe, but what you get from interest is less than what you could get from other investments. Some money in the bank is a good option, it usually has the advantage of being accessible.
Look into what is on offer, perhaps from several banks. If you put money into
term deposits, make sure you check for the best interest rates available
every time your deposits mature. If you allow the bank to automatically
reinvest the money for you, you can be confident that you will not get the
best available interest rate.
Government BondsSimilar to banks in safety and interest rates. Note that they can be bought and sold.Managed investmentsThis suffers from the same fault as going the path of the investment advisor; someone will be getting a regular, annual, cut from your hard-earned money, quite probably 2% per year, or more.Interestingly, an IA will probably advise you to place at least some part of your money in Managed Investments. Both the IA and the people who run the Managed Investments then will take their cuts. Compare Listed Investment Companies. |
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I have given this a main heading of its own for several reasons,
When you buy shares in a company you are placing your money in a business. If the business does well, so will you; if the business does poorly, so will you. Unlike property, a company can increase in value in a real way. There are a great many companies, there are even quite a few types of companies. I suggest looking into the corporate governance of a company before investing; try looking up the Horwath Corporate Governance Report. You might also look into how much the companies pay their top executives; I believe that those that pay the most tend to perform more poorly than those who pay more reasonable fees.
You could also look up the
RepuTex
Social Responsibility
Ratings of the companies you are considering investing in.
Listed Investment Companies (LICs)There are many of these, you could get yourself a copy of the Personal Investor magazine which always gives a list of the current ones.LICs reinvest their shareholder's money in other investments. For this, of course, they charge a fee; but in a number of cases it is much less than the fee charged by an investment adviser or a managed fund. I will not give names, but fees for reliable LICs can be as low as 0.2%, much better than the 2% commonly charged by managed funds. |
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| There are many (too many) books available that deal with all sorts of investments. There are magazines at all news agents. There are investment journals that you can subscribe to. You can get information over the Internet; eg. The Australian Stock Exchange provides free, on-line, courses on many aspects of investing. |
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IndexOn this page...Background Government bonds Information Investment advisers Listed Investment Companies Managed investments Money in the bank Property Shares Top What should you invest in? |