Investing is about making your money work for you.  Many people will save for a specific goal; it might be a new car, a holiday or a night out on the town.  Investing is taking the next step and putting your savings to work. 

It is important to consider how long you are planning to invest as this will impact which investment options best suit your situation.

Below is some general information on investing, however for more detail on how Hogben Farrell Financial Planning can help you with investing, contact our office today.

Risk and return

Everybody is worried about risk, yet risk is part of our daily lives.  A good investment plan recognises the risks and either protects against them or uses them to increase a portfolio’s potential return.  Investment markets offer a risk/return trade off, the greater the risk, the greater the potential return.  Returns in investment markets are volatile and when investing it is important to remember this.

There are a number of ways to reduce the riskiness of an investment portfolio while maximising your returns.  One method is diversification, investing across a number of different options such as shares, international funds, managed investments, property and fixed interest.  Another strategy is to invest your funds over a period of time, which takes advantage of the market cycle and makes your investment returns much smoother.

Managed Investments

Investing in managed funds will give you access to Australian shares, property, bonds and international markets.  It is difficult to achieve sufficient diversification when investing directly.  Using managed funds means a relatively small sum can provide access to a wide range of investment options.  Fund managers use dedicated researchers and analysts as well as a distinct investment process to determine their underlying investments.  We can recommend a managed fund, or an investment portfolio that will be tailored to your goals and objectives.

Shares

Many Australians own shares directly.  This ownership may have occurred due to a share float or because an insurance company you had a policy with listed on the stock market and you received shares.  As a shareholder you own a portion of the company and have a right to vote and receive a share of the profits.  We can help you put together a share portfolio that will meet your needs.

International Investments

Investing internationally provides your portfolio with additional diversification.  Australia makes up only a very small portion of the world market and investing globally gives people access to a much wider investment universe.  Currency fluctuations will impact on the returns you receive from international markets.  Hedging can assist in reducing the impact of currency on your returns.

Dollar Cost Averaging

The purpose of dollar cost averaging is to provide your investments with a more even purchase price.  Investing a set dollar amount at regular intervals may reduce the price you are paying for that investment as you automatically buy more when prices are low, and less when prices are high.  This process smooths the purchase price and therefore also smooths your investment returns.  Dollar cost averaging allows you to drip feed into your investments.