The Importance of Setting Financial Goals: Achieve More with SMART Goals
Learn how to set clear and achievable financial goals using the SMART method. Start planning for your financial future today with Poole Advisory.
Any meticulous investor always follows the golden rule, which is to diversify their investments. In other words, don’t put all your money in a single type of investment as there is usually a higher chance you could lose more instead of earning more.
While you may already be aware that diversifying your investments isn’t as easy as it seems when you’re still starting out, it’s important to at least know what your options are.
Before you continue reading, have you read Part 1: The Basics of Building Your Investment Portfolio.
Here’s what you should know about some of the most common investment vehicles you should consider putting your money into:
Before delving into specifics, it’s crucial to first establish what these three types of investments are and why it’s important to pay attention to them.
All three of them comprise either one or many different assets, such as
They’re essentially quite similar to each other, but the qualities that make them different will ultimately determine which investment vehicle suits you.
First and foremost are managed funds, which is the most common investment vehicle in Australia.
As the name suggests, managed funds require a fund manager to oversee everything. It typically involves investments coming from different sources that are pooled together and managed by professional investors or managers.
This is a much more distant approach when it comes to investing. If you’re still not that experienced in investing then this vehicle may be a good starting point for you.
When you put your money in a managed fund, you’re basically giving your money to the fund manager to invest on your behalf. You have little to no say over what they do with your money or where they invest it.
While that may seem risky, working with a fund manager that has a good track record and invests wisely can eliminate the risk.
Listed Investment Companies (or LICs) are investments that are listed on an exchange, such as the Australian Stock Exchange (ASX).
They’re quite similar in nature to a managed fund, but with just a few differences:
LICs are what’s called a closed-ended investment vehicle in the sense that there are a finite number of shares that a LIC has at any given time.
Suppose you decide to sell your shares; they will only be passed on to the buyer and will not be redeemed by the company itself.
Exchange-Traded Funds or ETFs are more of a combination of the previous two investment vehicles. They’re similar to managed funds as they are also trusts, but they are sold and bought on an exchange, similar to a LIC.
An ETF is also actively managed by fund managers who will monitor and adjust your investments.
Purchasing an ETF will require you to pay a brokerage for each transaction, and it is done in the same way as a stock listed on an exchange.
These 3 types of investments may be worthwhile in exploring if you are someone who is entirely new to investing. If your goal is to diversify your portfolio, then looking into these three investment vehicles may be a wise and sound decision.
Poole Advisory is a privately-owned boutique advisory firm in the Southern Highlands that strives to provide a wide range of solutions to clients with different needs—from estate planning, financial advice, life insurance to honing down the best investments for retirement.
At Poole Advisory we take the time to understand your appetite for risk and to match you with appropriate investment opportunities and structure so that you can grow your wealth effectively.
Make an appointment with us today and see how we can help you lead a life of financial fulfilment.
This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns
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With that in mind, building your investment portfolio is a great way to secure your financial future. However, it needs to be developed strategically, with the right asset classes and a universe of options to choose from.
Learn how to set clear and achievable financial goals using the SMART method. Start planning for your financial future today with Poole Advisory.
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Learn how to set clear and achievable financial goals using the SMART method. Start planning for your financial future today with Poole Advisory.
Learn the essentials of superannuation, including contribution types, SMSFs, and tax benefits, to help secure your financial future in the Southern Highlands.