Newbie - which managed fund or how to start

Hi,

I'm just about to enter full-time employment (only earning about 54k/annum) after studying for 5 years (just finished Mstrs in Phty) and really not sure as to where to put my money to enable it grow while still enabling me to live comfortably and invest for retirement etc etc. Main decision seems to be whether to loan to invest or just constribute as much as I can with cash (although this is already post tax dollars etc).

There appears a huge amount of options out there and obviously I am reading as much as possible (although may not appear as such). Considering the current financial status, buying into managed funds for long term growth would seem a reasonable option (with cash) but I have no idea which funds to go for, who to chat to. At the other end of the risk spectrum seems the 'loan to invest' option and living off passive income, which although appears to have better tax offsets (correct me if i'm wrong), the risk is much higher.

Any advise for the graduate would be great - yes I am reading, reading, reading...

cheers,

Matt

 

First let me start off by saying I wouldn't recommend you invest in any shares at all for the next year or so. That's my own personal view - I wouldn't be rushing to buy shares or managed funds at the moment, I think that the current downtrend is likely to continue for a while yet.

Having said that:
Some people will advise you to invest in managed funds - personally what I would do in your situation is aim to buy a regular parcel of shares in a listed investment company.

Have a look at:
Argo Investments
Milton Corporation
Australian Foundation Investment Company
Djerriwah Investments

there are several others too.

You don't have to worry about fees (other than brokerage when you buy your shares), if you make regular purchases throughout the year then you are going to build up a reasonable shareholding without feeling like you have to pick the bottom of the market.

These companies do the same thing as managed funds but don't charge you a funds management fee for the privilege. It's a good way to get exposure to the sharemarket as a whole without cost.

Another possibility might be to invest in an index fund, which is designed to perform exactly in line with whatever the stockmarket does, i.e. if the ASX200 returns 5% in a year, then an index fund which is linked to the ASX200 will replicate that return. Index funds are not as glamorous or sexy as managed funds but costs are lower and they outperform many managed funds.

 

I know I'm personally looking at investing in index funds over the coming months.

Though I was also looking into Vanguard funds for awhile there which look pretty good.