There are many different types of investment options available. Choosing the right options for you can sometimes be a minefield if you are left to your own devices. You may even find yourself staring at an investment menu for hours, not knowing which path to take. However, with the support of a Financial Advisor from Endorphin Wealth, you can be provided with clarity as to which options suit your situation.
Let’s first examine the different types of investments available.
DEFENSIVE INVESTMENTS
Defensive investments are deemed to be lower risk investments in that they aim to provide income while protecting the capital invested. Consequently, cash and fixed interest are thought of as defensive investments.
They’re typically used to help meet short-term financial goals (up to two years) and diversify a portfolio.
- Cash – Includes bank accounts, high interest savings accounts and term deposits. This is used to protect wealth and diversify a portfolio.
- Fixed Interest – Includes government bonds, corporate bonds and capital notes. This investment option is often used to help earn a steady rate of income, whilst also diversifying a portfolio.
GROWTH INVESTMENTS
Growth investments are generally considered higher risk and offer a higher potential return when compared to defensive investments. As such, they aim to give capital growth and some provide income (for example, dividends for shares or rent for property). However, the price of growth investments can be volatile over short periods of time.
Growth investments are typically used to earn a higher rate of return (though this comes with higher risk) and help meet longer – term financial goals.
Such investment options include shares, property and alternative investments.
- Shares – if you purchase shares in Australian or international companies, you’re essentially buying a piece of that company, making you a shareholder. The value of your investment can rise or fall, depending on company performance and market conditions. Additionally, you may receive a portion of the company’s profits in the form of dividends.
- Property – includes investing in residential, commercial and industrial property. This form of investment is used to earn a steady rate of income (rent) plus offer capital growth
- Alternative Investments – includes private equity, infrastructure, commodities (including precious metals) and other investments that don’t fall into the investment classes above. Most aim to provide capital growth, however, some have the potential for steady income
BEFORE YOU INVEST
It is very important to consider your personal situation before investing in any of the above investment options. An option which may be appropriate for your neighbor, may not be appropriate for you. At Endorphin Wealth, each advisor carefully considers your personal situation before making any recommendations. They also consider:
- How the investment works
- How it generates a return and the type of return expected (capital gain and/or income)
- The risks involved for the investment
- The fees and charges for buying, holding and selling the investment
- How long to invest to receive the expected return
- Legal and tax implications of the investment
- How the investment will contribute to your diversified portfolio.
Your adviser will be able to consider all possible scenarios and factors, all of which should help to ensure that your investment plans have a successful outcome.
For an obligation-free conversation about your financial future, please contact us on 03 9190 8964 or at advice@endorphinwealth.com.au.
The team at Endorphin Wealth are passionate about helping people achieve their life goals with great financial planning. We are not licensed or owned by big banks and financial institutions. So the advice and wealth management we provide is always in our client’s best interests.
We have the advantage of being able to access a range of products from different providers. This means that our advice can be tailored to our client’s goals. We have offices located in Sydney and Melbourne, where you can find a financial advisor that is suitable for you.
Reach out today to speak to an Advisor who can guide and support you down the right path for success.
