Shares or Bank

[smooking39]

I have some spare money in the bank that im getting around 5% a year off. What improvement would i likely get if i put my money in a managed fund? Also what risk would i be adding?

 

[Bojangles17]

I have some spare money in the bank that im getting around 5% a year off. What improvement would i likely get if i put my money in a managed fund? Also what risk would i be adding?

managed funds typically track the ASX, stock market indexes...so if the market rises , you would generally expect Man Fund trusts to rise. They spread the risk given the manager invests in a number of companies and for the average punter a better bet than going solo into the market. Naturally is more risky than a fixed term deposit as this is not dependant on anything. I am putting money into International share managed funds right now..given interest rate rises are likely to spook aussie shares for a lil while

 

[daddy_4_eyes]

It depends on what your goals are, what timeframe you're looking at, etc.

A managed fund will offer better returns than interest earned in a savings account over the long term. Short term you might actually see losses or very small returns.

What timeframe you're looking at will also impact on how much risk you're looking at taking on. Will you invest a high risk fund with mostly shares (Aust and international), or a conservative fund that has more funds allocated to fixed interest? The former is recommended you look at 5-8yr time frame, the latter 3-5yrs.

I've personally got my money in the bank earning 6.55% p.a. because I'm looking at spending it middle of next year and am not willing to weather any short term losses.

 

[SorryIHammerChicken]

Which account do you get 6.55% at?

 

[daddy_4_eyes]

Which account do you get 6.55% at?

AMP offers a bonus +0.75% for the first 6 months of your account opening. As my investment is very short term (12 months at most) I figured I might aswell take advantage of it.

 

[danzan22]

i heard that the stock market has been on a 11% rise on average for the past 40 years each year, so i would think they would be the best option but it depends how much money you have, if its only a small amount then its not worth it because you should to invest in around 15 different stocks to get this sort of increase.

 

[Jabso]

Danzan there are managed funds that only take a small investment and do all the diversification work for you. However peformance fees and many other fees are a disadvantage but they are ideal for people who want to get into the stockmarket but don't want to make the decisions themselves (that's not to say they don't get a say).

 

[HBF]

I have some spare money in the bank that im getting around 5% a year off. What improvement would i likely get if i put my money in a managed fund? Also what risk would i be adding?

Depends on what you are looking for mate. I'm no expert, but ING Savings Maximiser is currently at 6.00% p/a, which aint bad considering you can have access to your money whenever you like, so therefore it's not locked away like a term deposit is.

If you wanna get into shares, a couple of goods that i'd have a very very close look at are SRG (Sydney Road Group) and CEU (Connect East).

 

[smooking39]

Depends on what you are looking for mate. I'm no expert, but ING Savings Maximiser is currently at 6.00% p/a, which aint bad considering you can have access to your money whenever you like, so therefore it's not locked away like a term deposit is.

If you wanna get into shares, a couple of goods that i'd have a very very close look at are SRG (Sydney Road Group) and CEU (Connect East).

Im currently using an ING saving Maximiser and since its a savings account im not taking money out. I dont want to get into buying my own shares because i dont have the skill or the money to back it up. I just want to see if there is an easier way to get more that 6.00%. The money is going to be there for at least two years i reckon

 

[daddy_4_eyes]

Im currently using an ING saving Maximiser and since its a savings account im not taking money out. I dont want to get into buying my own shares because i dont have the skill or the money to back it up. I just want to see if there is an easier way to get more that 6.00%. The money is going to be there for at least two years i reckon

Greater than 6%, try a managed fund. Returns aren't guaranteed, but in the long run you should be better off than a savings account. Managed funds allow you to structure your investments as you please, meaning you can invest in australian shares, international shares, property, cash, etc.


There's always the option of a margin loan, where your returns could be increased further by using someone else's (banks) money to fund your investments. Though you should consult a financial adviser and have him outline all the risks of this.

 

[Kurt Angle ©]

For people outside of WA, Bankwest is looking to expand into the eastern states, but in a "without branches" manner, they want east coast customers to be electronic bankers.

For the first 12 months, they'll offer 6.80%

 

[smooking39]

For people outside of WA, Bankwest is looking to expand into the eastern states, but in a "without branches" manner, they want east coast customers to be electronic bankers.

For the first 12 months, they'll offer 6.80%

tempting
is there a minimum deposit

 

[GoOsH1]

tempting
is there a minimum deposit

dude, if you are going to have it in their longer than say 2 yrs, then definitely definitely put it in managed funds, most bad years you'll still get 5%, good years you can expect 10-20%. having your money sitting in a bank long term is nuts IMO.

 

[smooking39]

whats the best way to go about looking for a managed fund. I have some finacial knowledge but not much and i dont really want to pay anyone for finacial advice.

 

[daddy_4_eyes]

whats the best way to go about looking for a managed fund. I have some finacial knowledge but not much and i dont really want to pay anyone for finacial advice.

Go into a bank and pick up a product disclosure statement. You'll find the application form in it as well as what fees you'll be charged, a summary of the funds available within the trust, and simple explanations how the fund operates.

You should speak to a financial advisor as your knowledge of different investment markets is clearly limited. The initial meeting is usually free, and if not they have to explain all fees and costs involved and attain your agreement before they can proceed with any advice.

If you see a bank advisor, such as a Commonwealth Bank, you should be able to get advice relatively cheap ($300), especially if you specifically scope out the rest of your financial situation and instruct them to only advise you on the managed fund. Its money well spent as the advisor will have to provide to you the plan in writing and outline all risks and costs involved. This way you can go home, read over the plan, and make an informed decision on how you want to proceed.

 

[i_hate_scams]

I have some spare money in the bank that im getting around 5% a year off. What improvement would i likely get if i put my money in a managed fund? Also what risk would i be adding?

i'm not going to explain what a managed fund is, or how it works, and all the benefits/costs, because i'm sure other posters have done that. However, what i will say is that once you've worked out your financial goals, risk perference and all that crap, etc, you want a fund manager that has a pretty good track record in whatever strategy you're into, or good "investment strategy management". At the end of the day, managed funds are a group of assets, may it be share, property ventures, fixed interest products, etc. what you want to do is pick a fund which has a good track record for a number of years, because it probably indicates that the fund has prudent / diligent investment managers. any managed fund is as good as the investment managers working behind them.

 

[GeneralDisarray]

Just wanted to say great thread peoples. I've been thinking about shares for a while and am very interested about managed funds. I put most of my money into a term deposit back in May at 5.65% with commonwealth and now I see they are offering the same thing at 6.20% and that really pisses me off.

I'll be looking into various managed funds over the next few weeks for sure.

 

[nokiacasio]

managed funds typically track the ASX, stock market indexes...so if the market rises , you would generally expect Man Fund trusts to rise.

Index funds track economic indexes like S&P500. Most managed funds are controlled by people with degrees. This adds to costs because you pay for their expertise.

Definitely managed funds are more risky than money market (your bank account) but there is higher growth, so it depends on your tolerance to risk.

ING Savings or Netbank Saver seems good for many people. You get 6% growth. But consider inflation is about 3% and remember that any gain you make from these accounts are taxed.

 

[Papa G]

dude, if you are going to have it in their longer than say 2 yrs, then definitely definitely put it in managed funds, most bad years you'll still get 5%, good years you can expect 10-20%. having your money sitting in a bank long term is nuts IMO.

This is wrong. If you had your money in international share funds from 2001 - 2003 you could have lost half your funds - People did. They have recovered now, but that's why it has to be long term, so if you do cop a pasting you have time to recover. I would also be a bit wary about investing in the Australian market as well. 3 straight years of around 20% growth plus all of this private equity activity gets me a bit dubious about the potential for a down turn.

 

[corporal]

Buy shares in BDL. This is the only company I would 100% recommend and I believe it should safely double next year, Westpac have been buying large parts of the company which is always an excellent indicator when the large banks start buying into a company.

Either that or put it all on black!

 

[Jabso]

Go into a bank and pick up a product disclosure statement. You'll find the application form in it as well as what fees you'll be charged, a summary of the funds available within the trust, and simple explanations how the fund operates.

You should speak to a financial advisor as your knowledge of different investment markets is clearly limited. The initial meeting is usually free, and if not they have to explain all fees and costs involved and attain your agreement before they can proceed with any advice.

If you see a bank advisor, such as a Commonwealth Bank, you should be able to get advice relatively cheap ($300), especially if you specifically scope out the rest of your financial situation and instruct them to only advise you on the managed fund. Its money well spent as the advisor will have to provide to you the plan in writing and outline all risks and costs involved. This way you can go home, read over the plan, and make an informed decision on how you want to proceed.

$300 for someone to push their products down your throat isn't what I'd call cheap, try to get an indepedent advisor, or at least an advisor that will openly recomend different products (unless you are committed to the banks product anyway). You have to do alot of homework. There are a few pretty good and free internet sites that rate alot of financial products, I forget what they are. Don't be afraid to question the financial advisor's ability and freedom to recommend stuff outside of that particular bank and even ask them what is in it for them (i.e COMMISIONS).

 

[daddy_4_eyes]

$300 for someone to push their products down your throat isn't what I'd call cheap, try to get an indepedent advisor, or at least an advisor that will openly recomend different products (unless you are committed to the banks product anyway). You have to do alot of homework. There are a few pretty good and free internet sites that rate alot of financial products, I forget what they are. Don't be afraid to question the financial advisor's ability and freedom to recommend stuff outside of that particular bank and even ask them what is in it for them (i.e COMMISIONS).

A few issues with your comments:

1) An independant advisor will charge you a fair bit more than $300. They're not really accessible to someone who has a small starting capital to invest with.

2) An independant advisor is likely to push his own selection of products too. He'd be well informed in a selection of products which he will push onto all his clients.
Not that it matters, as most products are very similar in what they offer, fees tend to be fairly close, and the investment options within the fund tend to come from various investment companies (i.e. CBA managed fund but he has the option to invest with MLC, Perpetual, AMP, etc). IMO, and some might disagree, but seeing an advisor isn't about the product, thats a secondary consideration.

3) All fees need to be disclosed by the planner. Clients shouldn't have to ask whats in it for them as the advisor has a legal obligation to inform the client what he gets out of it. So if there's a conflict of interest ("what does the advisor get out of it") it should be identified long before the client proceeds with any investments.



That aside, I don't like bank advisors either, lol But they serve their purpose (take on all the sh.t clients).

 

[weagles_fan]

For the safest bet go Billabong (BBG). Will definitly make some profit but not as much as you may with others, especially in short term.