As we get older we start to think about planning for the future and how we are going to fund things like retirement. We have financial planners telling us about the value of compound interest and how the earlier we start the bigger the impact this will have. Where to invest our hard-earned money can seem like a bit of a minefield with the following being some of the issues we need to think about:
- Rate of return
- Level of risk
- Term of deposit
- Liquidity of investments
- Tax implications
- Cash flows
Investments, and the tax implications for the investor, can be quite varied and the advice and support of a fully licensed, reputable financial advisor is invaluable. They will work with the investor and their tax advisors to ensure that the investment strategy implemented is a specific fit to the investor based upon the items listed above. Unless you have a great deal of personal experience in this area, your first port of call should be to speak to one of these professionals, before you start investing your funds.
There are also a number of methods of investment and each will have their pro’s and cons. For example, the more liquid the investment, the lower the return could be as it will be seen as a short-term deposit. Conversely, a long-term investment can generate higher returns, especially if invested in less volatile, lower risk investments.
Below is a list of some of the short and long-term investments you can make:
- Bank savings accounts
- Term Deposits
- Superannuation (up to a legislated cap or there are tax implications)
- Stocks and Shares
- Gold and other precious metals
In short, don’t just jump into making investments unless you have a great deal of knowledge in the field and are happy with planning your own investment strategy. Speak with a qualified, experienced Financial Advisor (not your tax accountant as they are not licensed or qualified to give you financial advice) to find the best strategy for you. Bring your tax advisor into the conversation so they can assist and ensure that your strategy is the most tax effective it can be.