Hi there, i'm 27 years old and on a minumum wage salary of 35k per year which is unlikely to increase much in years to come (i work to live, not live to work!). I have however just recieved 100k in the past few months. I already have my own apartment owned outright, so i'm looking towards the stockmarket as perhaps my best option in terms of investment. I dont wish to invest in a second poperty either. I was considering was investing the majority of this money into a managed fund. The main reason for this is that i have very little knowledge of the stock market, and whilst i find it interesting, it isn't something i would like to be making decisions on when it comes down to my future finances. Therefore i would rather have a fund manager who can make these decisons for me. I also realise that this maybe one of the best times to enter the market, and i dont mind waiting up to 5 years for a return on my investment. In addition i dont mind high risk investments, and would prefer an option following shares, perhaps involving the asx200. I have currently been looking at The colonial First choice 'high growth' option as perhaps a good one to run with. I do feel the fees are a little high, so also wondered if my money would be just as safe in a 'lesser known' fund managed account which charges smaller fees. I also have to take into account that i need to comfortable that the particular fund manager will 'do the right thing' by me as i dont want to be taken for a ride in these shark infested waters!!! Can anyone guide me to safe waters? many thanks, james
Hi James, You may want to investigate investing in blended funds, rather than investing purely in 100% growth. Eg, a balanced fund will invest 70% of the money in shares and property and the other 30% in cash and term deposits. This will give you a taste of investing without the larger volatility associated with a 100% growth fund. You should try google risk profiling tools to find where you feel most comfortable. Cheers, Dan PS This is general information. Before investing speak to an FPA registered Financial Planner.
I agree with Dan, despite the fact you're comfortable with a high risk portfolio, it still might be wise to diversify both horizontally and vertically and $100K should definitely allow you to do that reasonably cost effectively. So some vertical diversification would include exposure to property and cash/bonds, though it might we worth looking into putting a small proportion in gold as a part of your cash exposure in these volatile times. I'd also recommend looking into investing into international shares (mainly through ETFs and managed funds) as a part of horizontal diversification particularly a few of the major emerging markets might also help spread the risk as well give you exposure to some of the faster growing BRIC economies. If you are looking for some safer waters that relate to the ASX 200 you might want to look into STW which is an ETF (Exchange Traded Fund) which basically just tracks the movement of the top 200 shares on the ASX. I think the best thing you could do is to not get too anxious with wanting to invest straight away and take some time to read these forums and other investing related resources to get a feel for exactly what you want then potentially look at going and having a chat with a Financial Planner and see what they have to say along with mentioning some of your ideas.
If you think the economy will pick up in the long run and you want to take advantage of this, I recommend Colonial First State's geared mutual funds. If the economy does pick up, the geared mutual fund will profit the most. That said, be careful about increasing risk too much because there is no guarantee the economy will recover. For defensive investments, get a bond fund (most mutual fund managers have one) or maybe get some gold (e.g. from the Perth Mint). How much risk you want to take is entirely up to you and everyone is different.
Hi James Great to hear you have a property with no debt - big plus given the financial crisis was started by too much debt on US homes! I agree with Dan and Chris about knowing your risk profile. You may feel like a growth investor. However, if you lost 50% of your initial investment, would you still feel like a growth investor. Just because you invest into a lesser known and cheap managed fund does not mean it will perform well - it may end up being a shocker. Likewise, an expensive managed fund does not ensure good performance. Do your own research by reading books etc and consider talking to a financial planner. Most financial planners don't charge for an initial appointment.
