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Women are great at budgeting and managing day-to-day spending and household expenses – a big tick in the ‘life admin’ box. In fact, more than half of us (52 per cent) say it’s the element of money management we’re the most confident with. But when we turn our attention to investments and superannuation, our confidence wavers a little. The good news is, investments are nothing we can’t manage with a little education.
The Super Woman Money Program released research showing that Australian women named ‘long-term investments’ (47 per cent), ‘planning for retirement and superannuation’ (38 per cent) and ‘property investment’ (35 per cent) as the three money management areas needing the biggest confidence boost. The thing is, investing doesn’t have to be hard, and no matter how much you have to invest – be it $100, $1,000 or $10,000 – there is something for you.
The longest journey starts with taking the first step and with the magic combination of time and consistency, even the smallest investor can be successful. So let’s get started by breaking it down into why, what and how.
Why invest?
We all have different goals and reasons for investing and they can usually be broken into timeframes:
- Short term (1-3 years): This could be for bulky expenses like school camps, Christmas, family holidays.
- Medium term (3-5 years): Events such as overseas holidays, deposit for a home or funding a career break.
- Long term (5+ years): Includes retirement planning or funding children’s education.
- Knowing how long you can invest your money for is the first step in deciding which type of investment is right for you.
What to invest in
There are plenty of options available for the small investor. I’ve listed a few below:
Savings accounts
- Online accounts, bank accounts and cash management trusts are just a few of the available options
- Rates are variable and can change. Look out for introductory rates and do your research (canstar.com.au or ratecity.com.au)
- Your money is at call and accessible
- Usually no minimum balances apply but sometimes you need to make regular deposits to secure higher interest rates
Term deposits
- Your money is invested for short, medium or long term
- Terms can vary from 30 days up to five years
- The interest rate is fixed and paid monthly, quarterly, annually or at maturity
- Minimums may apply and funds aren’t usually accessible prior to maturity without some penalty
Managed funds
- Managed by a professional manager, these are investment vehicles that allow you to pool your money with other investors so you can purchase a wide range of investments
- Investment options range from conservative to high growth, sector specific (eg Australian equities or property) to diversified funds
- Initial investments can be as low as $1,000 and you can add as little as $100 per month as a regular payment
Listed Australian shares
- When you buy shares you become a part owner in a company that you are probably very familiar with and use every day
- You can participate in the growth of the business and share in the profits by receiving dividends and have your wealth grow as the business grows via increase in share price
- Not for the fainthearted as not all companies move in the right direction (does One.tel or Ansett ring any bells?)
- Shares can offer higher returns than cash but this comes with higher risk
- Be prepared to invest for the long term and be aware there will be periods of volatility
- Dividends can be paid to your bank account or reinvested
- Shares are usually a long-term investment of 5+ years
Property trusts
- These are investment vehicles that own assets which are property-related
- The trust could own one asset or many
- Listed property trusts are quoted on the ASX (like direct shares) and their price fluctuates
- Unlisted property trusts are usually managed by a fund manager and price is determined based on the fund’s assets
- Investments can include commercial property, office blocks, hotels, retail or property developments
- Property trusts are usually a long term investment
Insurance bonds
- These investments are typically issued by a life insurance company
- Due to their favourable tax treatment they can be used for long term savings goals such as children’s education
- Most bonds have options allowing you to invest in a broad range of investments
- They are referred to as tax paid bonds because even though income earned is not taxed in your hands, it is taxed in the bond at the company tax rate (currently 30 per cent)
- If the bonds are held for at least 10 years, it is considered ‘tax paid’ and no further tax is payable on the growth
- Please note, there are other tax implications with these investments that should be considered prior to investment.
How to invest
There are many different ways to invest:
- Lump sum (in for a penny, in for a pound)
- Regular investment plan ($10 or $100 per month)
- Initial investment with irregular lump sums added from time to time, for example, using tax refund cheque, birthday presents, bonuses from your employer, etc.
(NB: You should always seek advice from a qualified and experienced financial planner before investing)
What next?
When deciding on the best course of action, you need to ask yourself, “What am I investing for?” and “How important is this to me?” If you can honestly answer these questions clearly and with conviction, you’ll be more likely to follow through with your chosen investment strategy because you will have clarity, commitment and focus.
To learn more, you can register with the Super Woman Money Program at www.superwomanmoney.com.au
About the Author
Anne Graham
Anne’s passion is providing comprehensive, tailored advice to help clients meet their financial and lifestyle goals. Her specialties include pre-retirement and retirement planning, superannuation, wealth accumulation and aged care. Find out more about Anne at www.superwomanmoney.com.au
DISCLAIMER: The views expressed in this article are those of the author, and may not reflect the views of VicSuper Pty Ltd. Any financial product advice is provided under the AFSL and authorisation of the author of the article. No warranty as to accuracy or completeness of the information or advice contained on the website is given and no responsibility is accepted by VicSuper Pty Ltd or its employees for any loss or damage arising from reliance on the information provided.