Introduction

What are some of the big ideas, the themes, that are likely to influence the economy, both locally and globally, in coming years? How about Australia’s aging population? As we collectively grow older we should see increasing demand for assisted accommodation, leisure and entertainment services, escorted travel, pharmaceuticals, healthcare and more. Waste is a growing problem. What does this mean for the development of new recycling technologies and recycled products? Which is the next emerging market or technology set to grow at a spectacular rate?

Introduction

Just as night follows day, it seems part of the regular cycle of the world’s share markets that downturns and falling prices follow good times and rising prices.

The impact of the COVID-19 Global Pandemic was typical of such downturns, prompting a 35 per cent sell off in world share markets and a dramatic fall in economic activity. Tourism and hospitality industries, in particular, were brought to their knees by sudden and prolonged closures.

For many, it has prompted memories of other equally, and sometimes more devastating, downturns in the world’s share markets.

Introduction

The potential financial results of investing can feel limitless, and it can be tempting to think that just one stock pick could make you an overnight millionaire. Yes, stock-picking can have a place in your investment strategy, but if you're focused on the allure of a "get rich quick" mentality, you may be gambling, not investing.

What's the difference?

Introduction

Most people view share market downturns as unequivocally bad events. Suddenly, hard earned savings aren’t worth as much as they were yesterday. It seems as if our money is evaporating, and in the heat of the moment selling up can look like the best course of action.

The alternative view

But on the opposite side of each share sale is a buyer who thinks that they are getting a bargain. Instead of getting 10 shares to the dollar yesterday, they might pick up 12 or 15 to the dollar today. When the market recovers, the bargain hunters can book a tidy profit.

Introduction

As the name suggests, an index investment fund seeks to deliver a similar return, less fees, as its chosen index. In its simplest form an index fund purchases the same shares in the same proportions as its index. For example, an S&P/ASX 200 index fund will hold shares in Australia’s 200 largest companies. An MSCI BRIC index fund will invest in major companies in Brazil, Russia, India and China. Index funds cover shares, commodities, precious metals and other asset classes.

Introduction

Lottery prize pools now amass huge amounts, regularly turning everyday Aussies into instant multi-millionaires. But being ‘struck rich’ is not only based on luck. There is more than $2.9 trillion worth of assets invested in superannuation in Australia.

A multi-million dollar inheritance can be a life-changer. Regardless of the source, most people who receive unexpected money are launched on an emotional roller coaster ride.

Let’s use a big lottery win as an example for this article:

1. The first emotion is usually sheer delight – Woohoo! Aren’t I lucky! (although if it’s a massive win, the first feeling might be utter shock!).
2. Relief generally follows quickly – I don’t have to worry about money anymore.
3. Then indecision – What should I do with it?

Regardless of how your windfall landed, here are some ideas to help you make the most of it.

Introduction

Popular in the days before compulsory superannuation, investment bonds fell out of favour as super became the preferred tax-advantaged environment. With tighter restrictions on superannuation contribution limits, bonds might be worth a fresh look.

Investment bonds are a type of insurance policy primarily used as an investment vehicle. Available from a range of providers, investors can choose from a suite of underlying investments in much the same way as regular managed funds. Investment bonds shouldn’t be confused with interest-paying government or corporate bonds. They are a unique type of asset offering a range of advantages.

Introduction

Here is a handy checklist to keep you focused on maintaining a balance.

Introduction

Introduction

Introduction

And so too, a man is a fool if he thinks he can successfully predict the future of the global economy. Like the weather it can be the most unpredictable and destructive threat to your investment earnings. But with a carefully built portfolio based on sound foundations, you have a much better chance of weathering any financial storm.