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Discussion in 'Introductions' started by Browntiger, 12th Jun, 2017.

  1. Browntiger

    Browntiger New Member

    Joined:
    12th Jun, 2017
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    Location:
    QLD
    Hi, I would like to introduce myself. I'm 35, married with 2 young kids. Me and my wife both work full time. Family income around $250k/year.

    I have invested some money in shares, some in ETFs and have 2 IPs. I'm not a very active or aggressive investor. I just want to invest for long term and dont want to do much once money is invested.

    Currently looking for ideas for where to invest now. I am a regular at PC but just came across IC only today. Its a great place to learn i think...

    Recently i came to know about the Investment/Insurance bonds and would like to gain more info on these.
     
  2. twisted strategies

    twisted strategies Well-Known Member

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    3rd Nov, 2013
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    Location:
    QLD
    welcome , Browntiger ,

    I haven't dabbled in insurance bonds , but did hold notes on AMP and IMF ( both now redeemed )

    the question I would ask you , is this the right time to invest ( more ) heavily ??

    ( I hold SUN , QBE and IMF normal shares but very few interest rate securities , currently )

    where to invest now is the magic question ( I myself am not finding many compelling investment opportunities at this time )

    good luck and happy hunting
     
  3. Hosko

    Hosko Well-Known Member

    Joined:
    25th Sep, 2016
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    79
    Location:
    Victoria
    Welcome Browntiger,

    Always a good time to invest - But into what at the moment? Shares, ETF, Bonds, Property or your own education, development and learning?

    I'm with Twisted, not a lot is screaming out that I should be parking money there so I'm trying to do a lot of learning/education at the moment but hindsight may prove me wrong....
     
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  4. Browntiger

    Browntiger New Member

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    12th Jun, 2017
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    QLD
    I agree that at the moment all the markets are quite hot.
     
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  5. Rakhi Withanage

    Rakhi Withanage Member

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    30th Mar, 2017
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    Location:
    Adelaide, SA
    Hi Browntiger,

    An investment or insurance bond is an internally taxed investment vehicle. Its taxed at 30% and tax free on withdrawals after 10 years if you don’t exceed the 125% contribution limit meaning in one year you don’t exceed 125% of the previous year’s contribution. It has a range of exciting financial planning opportunities such as;

    1. It can be used in situations where clients marginal tax rate is over 30% (e.g. $37,000 and above), bonds do not distribute income on an annual basis and you can hold within a family trust to manage tax even more effectively.

    2. It also bypasses the will so can be used in many estate planning strategies, proceeds can be paid tax free to beneficiaries upon death (both dependent and non-dependent) no matter whether the bond has reached 10 years.

    3. Funeral bonds also don’t count for Centrelink means testing so can be used in social security strategies.

    4. They can be used to compliment super for clients who don’t want to lock all their money away in super or for those who have exceeded contribution caps.

    5. Finally they can also be used for children’s education savings and the 30% tax is refunded and can be withdrawn at any time.

    Hope this gives you a bit of understanding about investment bonds.
     
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  6. Browntiger

    Browntiger New Member

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    12th Jun, 2017
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    Location:
    QLD
    Hi Rakhi,

    Thanks for the detailed reply. Yes i have read all these points but my main question is that are the investment bonds like shares or property where your initial investment grows (capital growth) as well as you get yearly return like dividends or rent?
     
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  7. twisted strategies

    twisted strategies Well-Known Member

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    Browntiger,

    i am an amateur on bonds ( notes and hybrids ) but have played a little with them

    bonds and notes ( in particular ) have a 'face value ' ( $100 is common ) any capital gain is made by buying on market at a lower price than the 'face value ' ( and holding on until they redeem getting face-value back or sell at a higher price later ),

    you will not always buy bonds at less than face value , but a bit of patience in dangerous times can be rewarded when risks seem to be high .

    more usually the interest rates is all you get ( and your cash returned at maturity )

    this is another sector that needs deep research ( those pesky tiny details ) please feel encouraged to get professional advice , if you have concerns here ( even our big banks will issue junk bonds to the unwary )
     
  8. Hodor

    Hodor Well-Known Member

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    hodor
    See this link, I believe it will answer your queries.

    https://www.moneysmart.gov.au/investing/complex-investments/investment-and-insurance-bonds

    Twisted I think you are speaking of something different to Rakhi (happy to be corrected)
     
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  9. Browntiger

    Browntiger New Member

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  10. Rakhi Withanage

    Rakhi Withanage Member

    Joined:
    30th Mar, 2017
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    Location:
    Adelaide, SA
    Browntiger,

    Yes the bond is just the vehicle, the investment option you chose once the money is in there is dependent on how much risk you are willing to take. For example a bond we use has around 40 or so different investment options such as fixed interest and cash on the defensive side and property and shares on the growth side.

    So yes if the underlying investment grows then so will the value of your investment bond. It doesn’t distribute income so it just gets re-invested into units of the investment bond.
     
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  11. twisted strategies

    twisted strategies Well-Known Member

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    QLD
    hodor ,

    quite possibly , this is a very complex sector ,

    Rahki , is talking about a vehicle that accumulates ( reinvests the interest , until maturity/redemption )

    Browntiger is much younger than me , so the suggested style may suit him better . as he has a longer time-frame to invest in .
     
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