In Australia, there are a number of tried and tested investment opportunities that have consistently delivered good results. Not all investment options are created equal however and what might be appropriate for one person might not be the best option for another.
Let’s take a quick look at the major investment vehicles available to the average Australian.
It's no secret: property has created more millionaires in Australia than any other form of investment thanks to the below real market value purchasing powers during an imperfect market. Investing today means you can get ahead as the population boom causes a shortage of supply down the track (this is only true if more houses aren’t built).
Potential landlords shouldn’t forget that the cash flow from tenants can conveniently subsidise mortgage repayments. Negative gearing is a term that describes the process where losses can be claimed back in reduced taxes.
The poor short-term performance of Australian shares over the past five years continues to overshadow their ability to build long-term wealth for the average Australian. But Russell Investments' recent Long Term Investing Report isn’t fooled. In the last 20 years, the report found Australian shares were the top-performing investment class on an after-tax basis, having returned between nine and 11 per cent a year (depending on an individual/couple's tax rate).
Although superannuation isn't technically considered an asset, over time, the guaranteed payments from employers will contribute to making Super one of biggest investments an Australian own make. Despite the global financial crisis hitting the majority of super funds hard, average balances have continued to climb over the last decade. When choosing a fund, pay attention to asset allocation, level of after-tax fees and quality of investment management over time to determine its investment performance.
Cash used to be king in the finance world and it still can be for you if you're looking for a relatively ‘safe’ investment option with guaranteed returns: short-term deposit accounts, which are often underappreciated and therefore fly under the radar. Another bonus is that short-term rates allow you to take advantage of a fluid interest rate cycle.
There’s no such thing as a real get rich quick scheme, but by doing your research and looking at all your options, you can find a great investment that’s right for you.
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