Investment Planning

The investment planning industry has had three great years. In Perth and across Australia, the past financial year produced a third consecutive year of “solid returns for investors,” according to AMP Capital Chief Economist, Dr Shane Oliver. Dr Oliver projects returns to “slow” in the coming year, but still provide “reasonable” returns. *

He attributes this to steady share evaluations and an economy growing fast enough to be healthy but slow enough to stem inflation. Here’s why.*

The Overall Outlook

Diversified investors who “moved beyond cash” saw solid returns. The average of superannuation fund performance was 9.9%, marking three consecutive financial years of growth at 9.9% or over. *

International equities ($A) provided a 25% return on investment (ROI). Australian listed property provided 20% ROI; global listed property returned 10%; international equities (Local) returned 9% and direct property returned 8%. Australian equities, Australian bonds and global bonds all returned 6%. Cash investments had the lowest ROI at 2.6%.*

Perth financial planners field a lot of questions about property investment on a daily basis. The concept sounds simple: purchase an investment property in a hot Perth suburb, rent it out and wait for capital gains to outperform all other forms of investment. But does it really work that way?

The Pitfalls of Property Investment

We have helped plenty of investors with well-managed investment property portfolios do well. So we aren’t saying that you can’t make plenty of money with investment property. However, there are plenty of pitfalls that can stop property investors before they gain a foothold in the market. Here are a few of them.

Unexpected Expenses

Were you ever a renter? Think back to what happened when something went wrong. Did the air conditioner go out? Did your roof suddenly spring a leak? Did an appliance such as a refrigerator or oven stop working? Do you remember who fixed the roof, replaced the appliance or bought a new air conditioner? It was the property owner.

One of our more popular financial services is investment planning. We know people in Perth work hard and expect life to repay them in kind. One of the best ways to ensure that you are able to enjoy the fruits of your labours is to invest your money wisely.

Recently, Dr Shane Oliver, Chief Economist and Head of Investment Strategy at AMP Capital, published a blog piece called, “3 tips for investing in the new financial year.” The piece consisted of a short video with three investment tips for the current economy. We would like to tell you about them.*

Turn Down the Noise

Dr Oliver expects plenty of volatility in the coming financial year. However, he also sees the “noise” surrounding volatility as a distraction that can “knock you off your strategy.” In other words, Dr Oliver warns that the “noise” of short term losses can cause an investor to abandon an asset due to short term losses instead of waiting for the asset to rebound in the long term.*

Diversify Your Portfolio

Dr Oliver warns against becoming too “confident in one particular asset” because it can make you too dependent upon the performance of that asset. He prefers a diversified approach that offers protection in case one asset performs poorly.*

If you happened upon this page, you are probably interested in investment planning and live somewhere in the Perth area. At Approved Financial Planners, we provide a full range of services such as financial planning and mortgage broking to our Perth area neighbours.

We are often asked what the “new trends” are regarding investing. While many investors like to jump on the newest trends, those who prosper the best are usually those who can spot investments before they become trends. If an investment is a trend, it often means that too many people have already “jumped in.”

Our parent company, AMP Capital, has identified what they believe will be an investment trend and a new asset class soon: global listed infrastructure.*

The Global Listed Infrastructure Team of AMP Capital is led by Tim Humphreys. Mr Humphreys holds a Bachelor of Engineering Degree with Honours from the University of Sheffield. He applies his knowledge of engineering to the financial field and is known as a skilled infrastructure analyst.*

The financial advisors in our Perth office are often asked for recommendations on what companies are the best or most reliable investments. Since everyone’s financial situation is different, we can’t really give any specific advice on this blog or over the phone until we have had an individual consult.

All information on our website is general by law, but we are allowed to provide some insight for you from our parent company, AMP Capital. We would like to tell you about infrastructure investment and why it can sometimes make a lot of sense for those trying to maximise their incomes.

What is Infrastructure Investment?

Infrastructure investment means investing in companies that build, operate or supply what is considered to be infrastructure. This includes distributors of gas, water, electricity and oil. It also includes communications, roads, airports, ports and toll roads. *

Many companies involved in infrastructure have long-term contracts, monopolies and built-in protection against inflation and other market characteristics.*

One of the services we offer is called “investment planning.” When potential clients call our Perth office and ask for an individual consult, one of the first things we ask is “what are your investment goals?” Often, the answer is “I don’t have any investment goals.” This raises what we see as an obvious question: “How can you have an investment plan without investment goals?”

Remember that all information here is general. We cannot provide any individual advice on our blog. If you want advice, you will need to call us and arrange for a free consult. Here are three tips for getting it right.

Getting a Handle on Finances

Whenever we provide an individual consult, it always goes better if you have a handle on your finances. This means knowing how much money you have coming in every month, your assets, how much money going out every month and your debts. People who know this information tend to be more efficient at saving money, which can eventually be used for investments.

At Approved Financial Planners, we have over 40 years of combined experience in providing investment planning in the Perth area. In this era, more people are paying attention to their future. For many people in the Perth area, “saving up for retirement” isn’t good enough anymore. In addition, many are opting to turn their current superannuation funds into self managed superannuation funds.

Understanding Investment Planning

Effective investing makes your money work for you. However, investments carry an inherent risk. Generally, the higher the risk, the higher the reward. When we consult with our clients, we like to make a plan. That plan usually includes your goals, assets, current income, projected income and risk tolerance.

Your Investment Goals

Different investors have different goals. Some just want to pick a retirement date and a level of income that will allow them to live comfortably. Others can be more aggressive, wanting to create cash flow for now and for the future.

The first step is to communicate your goals. These can be short-term goals that you want to attain in the next 6 months to a year, medium-term goals that you want to attain in 2 to 5 years and long-term goals that are more than 5 years in the future.