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Talk to a planner about... Money to Invest

Do you have money to invest but are not sure where to start?
The following example illustrates the danger of procrastination and delay.

Our fictional investor Mr D. Lay has had $50,000 in a bank account for the last 5 years.

During this time he has received interest of $2,000 per year (at 4%) totaling $10,000. Mr Jones is on a high marginal tax rate so has paid $4,100 tax on the interest paid.

This means that his after tax return has been a meager 2% per annum. The "real return" (after inflation) has been negative over this period so in "real terms" he has actually lost money over the five year period.

The case of Mr D. Lay, illustrates how investors can lose out by leaving money in low yielding accounts over a long period. Procrastination can be expensive!

Often people will be reluctant to invest "in case I need the money". In most cases, it is possible for the investor to set aside a reasonable amount for emergencies, then invest the rest for the medium term.

For example, a lump sum could be allocated as follows;

Medium to long term investment - 80%
Emergencies - 20%

By choosing to invest for the medium to long term, the investor has a far wider choice of investments and the ability to invest in more "tax friendly" investments. This translates to potentially higher returns and a lower tax liability.

At Wakefield Partners we can offer advice on a wide range of investments including;

Term Deposits • Property Trusts • Direct Shares • Debentures • Property Funds • Share Funds • Mortgage Trusts • Cash Management Trusts • Overseas Funds • Preference Shares

The key to sensible investing is to maximize your return while staying within your comfort zone. While high returns may be attractive, investors need to be comfortable with their chosen strategy and understand their investments.

Contact us via email or talk to us on 08 8333 2488.