Learn About Investing
Types of investments
When it comes to investing in managed funds there are a wide range of investment options to choose from - be it income assets, growth assets, or diversified funds that offer a combination of both.
The right type of investment for you will depend on your investment objectives, timeframe and appetite for risk.
Income Assets
(Also known as Defensive assets)
|
Growth Assets |
| Cash, bonds and mortgage securities are considered income assets. They typically deliver returns in the form of income (i.e. pay regular income or interest payments to the customer).
Income assets are generally more stable and may feature:
- Typically lower returns than growth assets.
- Generally less fluctuations in returns over the short-term when compared with growth assets.
- Returns are generally lower than growth assets over the medium to long-term, balanced with lower risk.
|
Shares and property are classified as growth assets.
Over time they generally provide returns in the form of capital growth.
Growth assets can be considered higher in risk and may feature:
- Capital growth over the long-term with some income.
- Fluctuating returns generally over the short-term, levelling out over the long-term.
- The potential to produce higher returns compared to other asset classes, balanced with higher risk.
|
The five main asset classes are:
- Typically, for short-term investors.
- Includes bank accounts and term deposits and may include higher interest paying securities.
- Generally, provides a regular income stream and is the lowest risk of all asset classes.
- Typically, for short to medium-term investors.
- Fixed interest investment such as bonds have low to medium risk, provide a reliable income stream and potential for some capital growth.
- They usually offer a higher return than cash investments.
- Bonds can be issued by a corporation, bank or government body in return for cash.
- Yet bonds that deliver higher returns are generally accompanied by higher risk.
- Typically, for short to medium-term investors.
- Generally have a low to medium risk and provide a reliable income stream.
- They usually offer a higher return than cash investments.
- Mortgage securities that deliver higher returns are generally accompanied by higher risk.
- Typically, for long-term investors.
- Potential for:
- higher returns and capital growth compared to other asset classes with higher risk.
- income through payment of distributions.
- tax benefits in the form of dividend imputation credits.
- Diversification benefits when investing across different countries, industries and companies.
- Typically, for medium to long-term investors.
- Includes property, property trusts and other securities across residential, commercial, retail and industrial property investments.
- Generally a lower risk growth asset than shares, but riskier than cash and bonds.
- Returns may include regular income and capital growth.
