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Investing well

25/01/2024

Making investment choices.

Investing can be a productive way to grow your wealth and help safeguard your future.

Whether you’re looking at existing investments or planning to invest for the first time, here are some key points you may want to consider.

What is investing?

An investment is an asset (like property, shares or even your superannuation) that you buy with the goal of it growing in value or providing income.  

We’ll keep it fairly simple by sharing the most common types of investments. These can typically be categorised as low or high risk investments.

Low risk options

These provide income and safeguard capital and are typically used to meet short to medium term financial goals. The two basic low risk investment types are:

  • Cash
  • Term Deposits

If you have money in a bank account, savings account or term deposit then you’re already a cash investor. The returns on cash investments come in the form of interest, and interest rates will vary widely. It’s a very common investment and is considered extremely low risk.

High risk options

These provide potentially higher returns and are typically used to meet longer term financial goals. The two main high risk investment types are:

  • Real estate - Property investing can include buying and renting houses, units, or other residential and commercial buildings. Property investors may aim to generate positive cashflow in the short term through rent and/or for property values to increase over time. It’s a common long-term investment in Australia but is not without risk.
  • Shares and Managed Funds - You become one of many investors in a business when you directly invest in shares and/or managed funds. Shares and managed funds can be complicated to understand because their value is influenced by many factors. There are risks associated with shares and managed funds, so it can be smart to use a professional adviser to help you with this type of strategy. Shares and managed funds can return an annual income through dividends and have the potential for long-term capital growth.

The golden rules of investment

Understand the risks

Opportunities always have risks. Before signing up to an investment platform, make sure you check its legitimacy so your money doesn’t fall into the wrong hands.

  • Set clear goals. If you know why you are investing and what you hope to achieve, it’s going to be easier to measure your progress. Having realistic goals is a big part of this.
  • Strive for balance. Diversifying your investments and not having all your eggs in one basket is generally considered to be a good idea to help your portfolio withstand downturns in particular markets.
  • Keep a cool head. We’re all human. As much as we think we make decisions with our head, our heart may drive us. Learning how to take the emotion out of investment decisions and avoiding knee-jerk reactions, will help you look at investments as a long-term approach.

Getting started

You can use a professional investment manager who will make investing decisions on your behalf or buy and sell investments yourself. If you choose to use a professional, there will be management, administration, and entry/exit fees in exchange for their expertise.

Still not sure?

If you’re looking for an expert to help you set up an investment plan, it may be worth speaking to a financial adviser. Our Newcastle Permanent financial planning team can create a paid-for statement of advice that is tailored to your investment goals and objectives.

This article is intended to provide general information of an educational nature only and the information has been prepared without taking into account any individual person's objectives, financial situation or needs. Information in this article is current as at the date of publication.

Financial planning

Our team of Hunter based advisers are here to help with all your financial planning needs.

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