It’s just become a part of life to save as much money as you can while scrambling to stay ahead of your bills and your rent. If you have ever managed to put away a small amount of cash, then you know how hard it is to just leave it sitting there in your bank account. But if you’re able to stop yourself from parting with that money and instead invest it, you could end up with a nice return on your investment, enabling you to use that money to fund even more future goals.
Let’s look at some of the best investment options out there for Australians who would love to build their wealth and retire comfortably in the future.
1. Stocks and Shares
The stock market is where you can make a lot of money fast, but it is also a risky game. Remember, companies don’t pay dividends, people do. If your stocks go up and you sell, you will owe taxes on the capital gains.
You still need to do your homework and make sure the companies you invest in have a future, though. You can do that by researching your stocks, checking their yields and their annual reports.
It all takes time, but if you know what you are doing and you understand the market, then you could build a nice portfolio that will ultimately yield a decent return on your money.
2. Fixed Interest or Fixed Income Investments
Fixed income investments are those where your capital remains intact, and you’ll only receive interest payments in accordance with certain conditions. The two most common types of fixed-income investments are bonds and term deposits. Bonds are issued by the Australian Government, Corporations, and even some private institutions, and they allow investors to be paid a specified percentage of the total face value of the bond over a specified period of time.
Term deposits are also issued by banks and other financial institutions, and they typically offer a higher return on your deposit than typical savings accounts. Term deposits can be opened as short-term and long-term investment options, with the long-term offering higher interest rates than short-term deposits.
One of the best things about short and long-term fixed-income investments is that, unlike stocks, the risk of default is very minimal.
3. Asset Allocation Funds
Asset allocation funds are similar to managed funds, but they are geared towards a specific type of portfolio instead of having a fixed allocation of different asset types. For example, a medium-term asset allocation fund will have a target asset allocation for a specific period of time, such as five years.
The advantage of choosing a fund like this is that you don’t have to worry about analysing the market or making decisions on your own, and you can just let the fund managers do it for you.
4. Mutual Funds
Mutual funds are similar to managed funds, but there is less risk involved because rather than a single manager controlling your money, there is a team of managers investing it for you. The best part about investing in a mutual fund is that, rather than having to put a lump sum down at the beginning, you can buy shares into it by investing as little as $1.
Annuities are essentially a type of insurance, but they are a lot less complicated than that. Annuities are investment contracts that are purchased by investors in order to provide them with a steady income in the future.
Once you have purchased an annuity, you can use the proceeds of this contract while they are still invested to fund your retirements, pay off your debts, or achieve any other financial goals you might have.
If you are looking for places to invest your money in order to build your wealth, look no further than the above options. Whether you like mutual funds or you would rather have a fixed-income investment or asset allocation fund, you have a lot of options out there.
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