Managed Funds Rookie at managed funds needing advice

Hi,

We're a family of 4 in our late 30s, with 2 young kids under 5 and a PPOR (mortgaged).
We're looking at options for investing around 10-15k for a long term period. We're looking at managed funds as an option and wanted to know:

a. What's the best way to go about it? Are there any go to funds that have a better performance history?
b. Which growth options should we be looking at? We sit moderately in terms of risk profile.
c. Besides fees and performance, what should we be looking at when deciding on managed funds?
d. Is this something that we can do on our own or do we need to engage a financial planner?

we've spoken to a financial planner who's estimated around 3k for providing us with MF options and undertaking the necessary paperwork (plus review our insurance and super, but we won't be changing these in the next 8-12 months). Thoughts?

Also, is this the best investment option for this amount for us or are there any option options?

We're thinking about another investment property in the near future however until we get there, we want to undertake some investment for growth.

Thanks in advance.

Regards,
Baggio10

 

I would be surprised if anyone is able to give you advise without knowing your personal financial situation.
- what is your goal, what are the funds being used for
- what you're looking to achieve, capital growth, cash flow.
- whats your current balance sheet like
- what are your current incomes
- what are your current expenses
- are you going to be adding to the investment or set and forget

 

For your investment amount, forget the financial planner. Consider splitting 5k across each of 3 market sectors, e.g. an Australian shares fund, an international fund, and a property fund.

Set and forget

 

Hi Brady,
Goal: study fund OR property investment contribution
Achieve : capital growth
Savings per month : approx 2k
Happy with either options - monthly contribution or set and forget.
Thanks!

 

Legally only someone licenced as a financial planner can give you advice on this.

If the fee is too high, which it may be for the capital involved, seek out another planner.

 

Thanks @chylld ! How do I best go about it?

 

If you are self-motivated enough, a simple online tool will help you make a decision. I find InvestSmart very useful as you can quickly search for funds by growth/income/return/morningstar rating etc etc.

Managed Funds - InvestSMART

Most importantly:

 

Try Exchanged Traded Funds (ETF) or Listed Investment Companies (LIC)

CommSec - Exchange Traded Funds - Spread your investments through diversification

research on LIC like SOL (SOUL PATTINSON) or BKW (Brickworks) and you see

Not advice just info

 

Giving away 30% of funds for advice on where to give away more of your funds is not what I would do. If you want growth with diverse companies look at Tech stock EFTs such as HACK, a safer but poorer return maybe obtained from comsumer staples such as IXI, more risky and volatile with higher potential returns ROBO. Perhaps the top 100 NADQ companies with the crappy financial stocks removed which has some great companies in it with the ETF NDQ You could give weighting to those to match the risk you want. Perhaps buy a good solid company that as good growth potential that can maintain margins and pass on cost increases in any ecomomic condiions such as BAP. AD8 may be good for a punt. Any ETF following the ASX index would be better than losing 30% before you start. You need at least 100-250k to get into a quality high performing managed fund with the elite top managers.

 

This is a non-financial advices I can give that may help
Open a commsec account in combination with Home - Australian Securities Exchange - ASX , both free and cost nothing

you can then can spends weeks or months pull out all sort of companies, funds and research all free of fees, take a long as you like to build your knowledge

After a while you get a handle of it and bit by bit you build your knowledge and after a few years you can do away with fund managers and advisors all together and save you a bundle of money

that bundle of money you can use to invest and grow into more bundle and soon you have so many bundle of money you have options in life.

One thing about the stock market is you NEVER miss out, you can come in now or 20 years laters and you can produce similar returns, with new business and it always evolving and with occasional crash it tend to reset once in a while so plenty of opportunities don't let anyone push you to run before you can walk

 

For that amount of money, I would probably just park it in a term deposit, and then use the time and effort I saved into educating and researching into what investments I would want to make in the future with the money (and hopefully with additional money I've saved in the time in between).

TL;DR is basically that education is the best investment at an early stage.

 

1. Spend time educating yourself
2. Pay for education
3. Pay for advise
4. Stick funds into term deposit, high interest online account until completed 1, 2 or 3
5. Stick funds into an EFT and make regular deposits

 

The common theme here is to educate oneself first. However for a relatively small investment amount of $10-15k, simply putting that money to work in a variety of diversified assets (managed funds, index ETFs, LICs etc) will serve a bigger lesson than any amount of reading.

I say that as someone who procrastinating for 2 years until I convinced myself that I was capable of managing my own portfolio. The longer I procrastinated, the more I had saved up to invest, and the bigger risk I felt leading to more research being required.

The solution for me was to invest small amounts into what I believed were good investments, and slowly crawl in $20-50k at a time as I learned real lessons with real money and grew my confidence.

 

Sounds like a short term goal that may not be suited to this investment class.

 

3k or 30-20% to manage your 10-15k investment........... funny

 

As others have said, do some investment research, your local library is a good place to start.

5 to 10 year minimum for shares. The longer the higher probability of a good return.

Recent 1 to 3 year performance is generally a bad indicator of future returns. It's really hard even for professionals to pick a fund that will maintain its performance.

The best thing an investor can do is picking a diversified fund with low fees.

Start at Vanguard and compare the rest.

Most managed funds are either all shares (growth) or all bonds (fixed income). A much smaller range called diversified funds combine shares, bonds and property.

One way to keep your options open and fees lower while matching your risk profile might be to split off one third in term deposits and the other two thirds in a share funds.

Tax!!! Research the differences between fund structures: managed funds, ETFs and Listed Investment Companies (LICs). Franking, capital gains tax, dividend reserves etc are all important and different aspects of each.

Benchmark. Which index does the fund benchmark against? Australia, International or Emerging markets. Large or small, growth or value stocks.

Learn to become your own financial planner. If only high schools taught budgeting and investing.

No surprises. Frankly, for $3k he won't have enough time to do a good wealth plan for you. You'd need to give him the entire $15k as a fee to get some quality advice that's why self-education is your best option.

Some other options to think about other than share funds:

1. Paying down Credit Card, car or personal loans with high interest, if you have any, provides the highest return.

2. Paying off your mortgage is a risk-free way to earn 4% pa.

3. Listed property trusts

4. Bonds

5. Gearing up and borrowing to invest in growth assets either shares or real estate

So you don't have a 'long term' investment horizon as stated up front, rather you want the money back in the 'near future'?

In that case, put it in the bank!

 

I would suggest that you could put the money in an offset against your PPOR mortgage.
This would save you (your return on the money) is whatever your interest rate is.
Safe money with decent return.

 

honestly.. this is win.. i do this allot

Aussie for those goodie franking
International for goodie growth
Property = Defensive ??

 

Is that the 15k in airfares you saved when Italy failed to make the world cup? I've always liked Italy so I feel your pain.

3k fee for 15k invested? That's just wrong. Avoid this advisor.

As stated, there's not enough information to answer your question properly. That being said:

You need at least 7 years to invest in the share market yet you are talking about an IP. When do you plan on purchasing the IP? If less then 7 years be wary. If you've got IPs why do you need more? You could invest in shares over time and get a comparable if not better result having better liquidity.

For someone such as yourself, I would suggest 8k in VAS and 7k in VGS. It is a diversified long term investment that requires no more thinking. If you want to buy more, keep buying to keep the same ratio of the stock values the same aka rebalancing. Make sure you buy parcels bigger than 5k and preferably just below 10k to minimise brokerage.

Not licensed to give advice .