The minimum amount that needs to invest in the UBS Australian Bond Fund will be $20,000. On the other hand, the minimum initial investment in the Russell Private Investment Series is $50,000. (Please read the conditions and information for both funds in the following web site, <www. ubs. com/australia> and <www. russell. com. au>) Source from Russell Investment Management Ltd 2007 This graph above is for you to understand more about the funds that you are going to invest in, it will help you locate the expected risk and the expected return for each fund.
UBS Global Asset Management – UBS Australian Bond Fund
I recommend you invest $37,084 into this fund. This fund needs to have a minimum of $20,000 initial investment. The fund contains up to 79% of safety government bonds and good credit rating companies bonds. Over the past 5 years, the fund had generated an average up to 5. 68% return per annual. The management fees are 0. 4% per annual, which mean in the funds had given a 5.
28% of return to their investors per annual. This is higher than the cash management you currently had.
An alternative fund that also performed well is the UBS – Cash Fund, although it gives a higher averaged annual real return of 5.54%, but this fund contains 100% cash. It didn’t meet the concept of diversification, so I will still recommend you to invest in the UBS Australian Bond Fund. These funds are relatively stable, because the types of these bonds are offered by government and high credit companies.
The return is significantly certain, and contains really low risk. So I recommended you’re to invest this fund for up to 5 or more years. Russell Private Investment Series – Russell Conservative Fund I recommend you to invest $37,084 into this fund. The Russell Private Investment Series need to have a minimum of $10,000 initial investment per fund.
This fund contain up to 46% of safety bonds. Over the past 3 years, this fund had generated up to 9. 5% return per annual. The estimated ongoing fee for this fund is 0. 68% per annual. So this may give you a return of 7. 3% per annual excluding the management fee. I recommend you invest this fund for 3 years or more. An alternative fund that also performed well is the EQT Grange High Income Fund. It offered an averaged 7. 3% annual return over 3 years and it minimum initial investment is only $5,000, but it offers a lower average return rate than the Russell Conservative Fund, so the Russell Conservative Fund is better.
These funds are classified as conservative; this fund will suit your investment style, because these funds have a higher return and lower risk. Russell Private Investment Series – Diversified 50 Fund I recommend you to invest $27,813 into this fund. The Russell Private Investment Series need to have a minimum of $10,000 initial investment per fund. This fund had an equal percentage of both conservative and aggressive assets. It contains 35% shares and 35% bonds. This will suit the concept of the diversification, which will decrease the risk and maximize the expected return.
The average return after fees for 3 years is 12. 5% per annual. The management fee charged against the fund will be 0. 78% per annual. An alternative fund that also performed well is the UBS – Inflation-Linked Bond Fund. It offered an averaged 6. 19% annual return over 3 years. But it minimum initial investment is $20,000. It offers a lower average return rate and a higher initial investment comparing to the Russell Conservative Fund, so the Russell Conservative Fund is better fund to invest in. I recommend that you invest these funds for 5 years or more.
Because this will give enough time to overcome the uncertain risk that this investment may contain. The 5 years time frame will provide effective diversification. This also suits your investment outlook for 10 years to retirement. Russell Private Investment Series – Russell Balanced Fund This managed fund contains a higher percentage of aggressive assets than conservative assets. The fund contains 52% shares and only 25% bonds assets. It is a semi-higher risk and semi-higher return investment fund. The Russell Private Investment Series need to have a minimum of $10,000 initial investment per fund.
The average return after fees for 3 years is 15. 4% per annual. The management fee charged against the fund will be 0. 83% per annual. An alternative fund that also performed well is the AMP FLI – AMP Monthly Income Fund No 3. It offered an averaged 14. 73% annual return over 3 years and it minimum initial investment is only $500, but there are a standard entry fee of 4% and the management fee is 1. 8%. So comparing to Russell Conservative Fund, there is higher and much more fees in the FLI – AMP Monthly Income Fund No 3.
In my recommendation, you should only invest $11,125 to meet the initial investment amount for this fund. This fund is semi-higher risk and semi-higher return investment fund, the management is quite high, which is 0. 83% per annual. You should invest into this fund for 5 years or more. Aggressive investment funds According to the possible asset allocations for different investor risk profiles which located in the asset allocations section, as a semi conservation investor, you still have to have some aggressive investment. The table suggested conservation investors should have 10-20% investment assets located in shares.
As you are a semi conservation investor, I suggested you should locate 35% of your investment asset in this portfolio into aggressive assets. So the following section will provide information about some aggressive funds that I recommended. Russell Private Investment Series – Russell International Shares Fund This fund provides a very high after fee return of 12. 5% per annual on an average of 3 years. This fund is containing a combination of international shares. The Russell Private Investment Series need to have a minimum of $10,000 initial investment per fund.
The management fee for this fund is significantly high, which it charged a 1.05% per annual, but the return is relatively high. I had discussed in the pervious section, about the relationship of risk and return. So I suggested that you should only invest $16,688 for this fund. I will also recommend that you invest in this fund for 5 years or more. An alternative fund that also performed well is the Credit Suisse Select Inv-Flex Int Shr Fully Hedged. It offered an averaged 16. 45% annual return over 3 years. But it minimum initial investment is $25,000 as we had not invested into any other Credit Suisse Asset Management (Australia) Ltd portfolio.
I am not recommending for you to invest in this fund portfolio. Although it got very high annual average return, but the management is 0. 09% higher than the Russell International Shares Fund. Russell Private Investment Series – Russell Australian Shares Fund This fund had allocated in different type of Australian shares classes. The average return after fees for 3 years is 25. 4% per annual. This fund had a minimum of $10,000 initial investment amount. This management fee is 0. 81% per annual, but this fund had the most historical return out of all the funds I had recommended.
This fund had a high degree of volatility, but not as high as the international shares fund. This fund is classified in the very high return and very high risk category. An alternative fund that also performed well is the Austock Australian Equities Fund. It offered an averaged 26. 73% annual return over 3 years. It contain up to around 94% of domestic shares, so it didn’t meet the concept of diversification, and also it had a standard entry fee of 2% and the management is about 1% higher than the Russell International Shares Fund.
It minimum initial investment is $25,000 as we had not invested into any other Austock Asset Management portfolio. I am not recommending for you to invest in this fund portfolio. I will recommend that you invest $18,542 into this fund to generate return which will effectively maximise your financial portfolio and achieve your financial goals. I will recommend that you should invest in this fund for 5 or if possible more than 10 years. Russell Private Investment Series – Russell Australian Property Securities Fund I recommend that you invest $37,084 into this fund.
This fund contain about 61% property investment of this portfolio, the suggest investment time frame will be 5 years or more. (According to Studley 2007) This fund had a good potential to expect to rise, as the property price of Australia is expected to continuously increase. This fund is a higher return and higher risk investment. This fund offered a 22. 3% annual return for 3 years, this fund required a minimum initial amount of $10,000 just like other funds in the Russell Private Investment Series.
The management fee for this fund is 0.81% per annual, but the return is relatively high. An alternative fund that also performed well is APN – Property for Income Fund. It offered an average of 22. 41% annual return over 3 years, and the minimum initial investment is only $5,000. But comparing to Russell Australian Property Securities Fund, it charged a higher rate of 1. 05% management fee per annual. Both ING DIRECT Savings Maximiser account and the managed funds portfolio should be held in Eva name, this will provide a lower tax on interest and dividend earning.
Superannuation Superannuation is a mean of saving and investing to accumulate wealth and then using that wealth to create a stream of income for consumption purposes when a person retires or leaves the workforce later in life. Considering your investment objective is to accumulate wealth, you can take several advantages from investing in super that there are larger investment compared to investing after tax dollars, earning taxed at 15% pre-retirement and 0% post-retirement, retirement income tax rebate.
You can contribute part of your salary to your superannuation fund through salary sacrificing schemes to accumulate wealth. These contributions are effectively reducing your taxable income and generate tax savings. For example, if you earn $1,000 in salary and your marginal tax rate is 30% you will lose $300 in tax. If you shift this $1,000 through salary sacrifice into superannuation, then you will be taxed at 15%, $150 only and save $150 tax pay. I recommend that you both sacrifice 10% of your salaries into your super funds every year.
This will generate tax savings of approximately $2,750 for the 2007 year and considerable savings in the year to follow. At the age of 60, it would be expected that your funds will have generated substantial financial growth. Chris, although you can get a considerable return from ‘International Shares’ fund with a nominal return of 10% last year. However, I recommend that you rollover your current super benefits from your existing ‘International Shares’ fund and contribute them into the Perpetual WFS Perpetual’s Ethical SRI, since this fund is providing the historical returns of 30. 4% in one year.
At the age of 60, it is estimated that your fund is likely to significantly grow to $2,265,933 based on this average. For more information of this product please visit <http://www. investsmart. com. au/funds/profile. asp? FundID=10535> (viewed 8 September 2007) Eva, your current superannuation fund is the defined benefit fund. Although this is a good funds that do not suffer if the funds performance deteriorates and the payments to members are maintained at the predetermined level, there may not allocated to individual member accounts and may not be sufficient money in the fund for the person.
As for this reason, I recommend that you rollover your current super benefits from your existing fund and contribute them into the Perpetual WFS Perpetual’s Ethical SRI which fund is same as Chris. This fund is providing the historical returns of 30. 4% in one year. At the age of 60, it is estimated that your fund is likely to significantly grow to $ 1989650 based on this average. For more information of this product please visit <http://www. investsmart. com. au/funds/profile. asp? FundID=10535> (viewed 8 September 2007)
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
