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Making your money work harder

Hand with a small plant

When establishing a long-term savings plan, online savings accounts and fixed term deposits in a low-inflation economy will not generate much growth. As an alternative, managed funds, given at least five years, can have a higher potential to surpass cash and fixed term investments.

Managed funds are also an easy way to invest in Australian and international shares. Through managed funds you can spread your money across different assets with one application, which can increase the potential for growth. Your choice of fund can restrict the investments to particular segments to meet your risk tolerance.

Investing works best over the longer term. But don’t let that deter you. Five or ten years isn’t “forever”.

How much do I need to start?

Depending on the fund chosen, you can start with as little as $1,000 initial investment, then make regular payments to build your investment. Salary deduction is an ideal way to establish a regular savings plan – if you don’t get it you can’t spend it and probably won’t notice it “missing”. Meanwhile it’s working for you.

Growth, income… and the opposite

Your money will be exposed to capital growth through rising unit prices as well as income from distributions. The income you receive is taxed in the same way as bank interest, at your marginal tax rate. It also carries the benefit of any franking credits attached to dividend income distributed by the fund, reducing the tax payable. Be aware though, like any investment, the value of unit prices, and your investment, can also go down. It’s another reason why good research and professional guidance is essential.

What about borrowing to invest?

Using someone else’s money to improve your own financial worth can be good as long as the terms work in your favour. It all comes down to the fact that all debt must be serviced. The interest and fees need to be paid. Ask yourself, “Will the return on my investment be greater than the cost of the debt?” If you can’t answer this question, seek professional advice and if the answer is “no”, find something more appropriate to you.

Contact us for more information on how to make your money work harder for you.


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