Investment Choices

Learn the basics of each investment type

Investment Choices

Background

If you’ve been through our Investment Fundamentals section, you’ll now have a good handle on concepts such as investing for your goals, risk & return, diversification, and asset allocation.

The next step is to understand what your investment choices are, and some of their key characteristics. This section will cover this across shares, hybrids, fixed interest, ETF’s, LIC’s, and managed funds.

Investing in shares

One of the most popular investments for self managed super funds, and indeed for many investors all over the world, is to buy shares in companies listed on a recognised exchange such as the Australian Stock Exchange (ASX).

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Investing in hybrids

Hybrids (also known as Listed Income Securities) are a type of security listed on the ASX that have become very popular with SMSF investors over the past decade. They are securities that have historically been bought for the relatively high level of income that they generate, compared to other fixed income type investments.

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Investing in fixed interest

Fixed interest is one of the oldest investments in the world, and the one that most people are intuitively familiar with due to bank deposit products. They are easy to understand and many people have had at least some experience with them.

However what is less well known is that the world of fixed interest contains many investment options outside of these simple bank products. Whilst many SMSF investors have heard of assets like bonds, they are somewhat hazy on the details.

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Investing in ETFs

Exchange traded funds (or ETFs) have experienced a huge boost in popularity both in Australia and around the world over the past decade. With an explosion of new ETFs offered that cover almost every conceivable investment market, asset class, and investment style, ETFs are now one of the most popular ways to express an investment view in a portfolio.

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Investing in LICs & LITs

Listed investment companies (LICs) and listed investment trusts (LITs) are another form of managed investment that are listed on the ASX, and have a range of unique characteristics.

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Investing in managed funds

A managed fund is an investment vehicle, where an investors money is pooled together with many other investors, and is then managed by an investment manager (also known as a fund manager). Investors receive units in the fund, which may then be sold at a time in the future. The value of the units in the fund will rise and fall with the value of the underlying investments of the fund.

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