Investment returns – some other considerations

When we invest whether it be in Superannuation Funds or Pension Funds or just Ordinarily Taxed investments clearly we want to have a good return on our monies commensurate with the risk we are taking. CLEAR and SIMPLE.

In our chase for returns we can sometimes miss other side issues that can take the gloss off a good return or enhance a return. Remember that just a small increase in TOTAL RETURN of even 1% per annum can have significant impact on the end result. Simplistically something earning 7% per annum (income and growth) will take a bit over 10 years to double whereas something earning 9% per annum will only take 8 years to double in value.

We would always advocate in principal that your return on investment is the main goal.

The purpose of this article is to highlight a few other considerations when doing some financial planning/investing whether it be a lump sum amount or just regular monthly amounts like for instance our employer superannuation contributions and/or a regular bank account deductions for investment in a “savings plan/portfolio”.

 Other considerations to assist in total return might be:

• Do I want to invest with a view to having some franking credits involved. Can up to 1.50% to 2% return depending on circumstances.

• Is the management fee over 1%. If so it might be a bit rich.

• If the investment is earmarked specifically for retirement then super taxed at maximum of 15% might be best.

• Am I approaching age 60 then Super then eventually Pensions might be the go as all tax free.

• In light of fees charged are Exchange Trade Funds (ETF’s) a better option than Managed Funds.

• I am a retiree – have I maximised my Centrelink – Age Pension with this choice of investments. For those around the mark you will be surprised what can be done. To highlight – every $10,000 less in assets that count means $780 per annum more age pension. A 7.80% return on your money.

• Internet savings accounts far outweigh day to day bank accounts with almost all the same facilities. 5% versus 1% is common.

• I am on a high marginal tax rate can I get the same or similar investment by way of an Investment Bond taxed at lower rates.

• Should I consider a GEARED portfolio for some of my investments to have more monies working for me.

At Plus1, we are available at any time to discuss issues of this nature, with due regard to your investments or financial planning generally.