Week Eight Reflection

Units covered this week are 16 to 18.


Unit 16: Advanced Graduate Strategy:

• Always consider the size of the 'pie' and how to expand it.
• Remember difference between deferred savings and real savings.
• Building $20k may take awhile.
• No strategy to pay back margin loan repayments.
• Dependent on how investments perform against the interest.
• Keep conservative lifestyle.
• Borrow more to keep LVR at 33%.
• Borrow full amounts with parent guarantee.
• Place extra savings into managed funds.
• With strong savings home loan repayments can be repaid by investments.
• Early savings give a lot of flexibility in the future.

Unit 17: Retirement

• Not a good idea to pull out all superannuation.
• Be neutrally active by getting a part time job.
• Leave money in super environment, mainly for tax reasons.
• Keep things simple.
• Aim to receive 0% age pension.
• Asset and Income test change from year to year.
• Employ a financial planner 10 years before retiring.
• Any pension gets you a pension card, saving greater than $1000.
• Invest wisely and live off that.

Unit 18: Estate Planning

• Establish will when I start working
• Re-evaluate once i get married.
• Intestacy can really destroy my distribution of wealth.
  

Week Seven Reflection

Units 14 and 15 were covered this week.


Unit 14: Managed Funds

• Passive funds have marginally lower returns.
• 0% entry fee is preferable.
• Exit and entry fees effect every single investment.
• Risk is dependent upon what is being invested.
• Don't need to be that cautious with defaulting if investing with normal assets.
• Able to start off with as little as $2-3k but there are a lot of managed funds out there giving you less control.
• Going with financial institution will be easier and provide confidence in investments.
• No guide for future returns.

Unit 15: Debt - foe and friend

• Gearing magnifies your returns.
• Can decrease the size of your 'pie'.
• Also known as leverage, and definitely not a short term strategy.
• Borrowing to buy a house IS gearing!
• Easier to get a margin loan compared to property.
• Able to negotiate interest rates, as well as margin loans being closely monitored.
• Don't ever pay capitalising interest.
• Make sure I have money saved somewhere else if my LVR is close to threshold.
• Never get in the position where I'm forced to sell my shares.
• Margin loans are not popular for managed funds.
  

Week Six Reflection

Units 11, 12 and 13 were covered this week.


Unit 11: Investing in Property

• Risk is much greater than investing in shares.
• Doesn't seem like the type of investment I am that interested in.
• Residential properties have much lower prices compared to commercial.
• High entry and exit fees for both types of property.
  
• Just because you double your money over a period of time doesn't mean you get fantastic returns.
• Returns in property seem to be unrealistic compared with the time and effort put into the investment.
• Buying an investment property at the start of a gentrification process will equal greater returns.
• Lower risk buying in an area with already established success.
• But it doesn't mean success will continue to run in the future, which nullifies lower risk.
• ATO finds many mistakes for property investments, so if I decide to buy an investment property than there would be greater stress getting my tax return done correctly.
• Investors usually only pay interest only because principle is not being taxed.
• Running cost of properties is much higher than share investments.
• Better option to use money to buy into a managed fun and let analysts diversify my portfolio.

Unit 12: Investing in Shares

• Current prices reflect consensus views.
• Online brokers are much cheaper and somewhat effective.
• Annual reports very useful information when researching for companies to invest in.
• Make sure records are kept and all documents kept for tax purposes.
• Remember that you are not actually wealthy until you have sold the shares.
• Portfolios may consist of 40-50 companies so it is very diversified.
• With margin loans both returns and losses are magnified.
• May trigger off a sale at the worst time if you get a margin call.
• It would be more beneficial to obtain multiple stock-brockers for more access to new shares.
• Be sure to get a phone service for online brokers.
• Recommended for student that 35-40% are international and 60-65% are local.
• Aim to save for very long term.

Unit 13: Other Listed Investments

• Listed property trusts are higher risks as the focus on commercial properties.
• Listed investment companies add value through research.
• Derivatives will be a good investment option for me in the future.
• Options have values which are linked to the core value of the share.
• Stay clear of warrants for 10-15 years.
• Futures will either make or lose you a lot of money.
  
• Stay clear of Contracts for Difference.

Week Five Reflection

Units 9 and 10 were covered this week.


Unit 9: Ten keys to successful investing

• Know exactly what you are investing in, thoroughly and confidently.
• Stay away from complicated assets.
• Stay away from commercial property investments for at least 10-15 years, which is fine with me as I doubt I will even be entering the investment property business, rather keeping my mind concentrated towards a managed fund.
  
• This allows me to diversify my portfolio simply, as well as not increase my stress with the performance of the property, and finally not trick myself with the returns I will receive.
• Higher returns will equal higher risk, but as I am young at the moment I am able to afford riskier investments, mainly through and aggressive or dynamic managed fund.
• Don't be influenced with the freebies that come with investment properties.
• Timing the market never seemed to be a problem for me as I previously considered it a huge mistake.
• Dollar cost averaging will lower risk by not allowing you to invest all your money straight away, and increase your discipline to save regularly.
• Re-balancing is a good way to discipline myself and gain better returns.
• Gearing will either rapidly grow or destroy my investments, so I must seek advice before I consider gearing for an investment.

Unit 10: Interest bearing investments

• Cash investments are one of the five mainstream investments.
• They allow you to get money within 24 hours which can be useful in emergency situations.
• Low probability of banks going bankrupt so losing my money completely is almost negligible.
• Low uncertainty means low risk which directly equal lower returns.
• Returns won't be great unless they are kept for 5+ years.
• Even then these are taxed as assessable income.
• Fixed interest accounts are for those who will need their money between 1-3 years.
• May be good to keep deferred savings (possibly for holiday) in these accounts.
• Don't believe guaranteed returns. THERE IS NO SUCH THING.
• There is a certainty of cash flow but there is some risk if not held to maturity.
• Lowest returns of all investments.
• Debentures may be a good investment for me, for a lower risk type investment.

Week Four Reflection

No work was completed in this week.

Week Three Reflection

The theory covered this week was Unit 8: Taxation.

• I now know how to calculate my own tax independently and confidently.
• Tax used to be a foreign concept but I now see that taxation is necessary and contributes to my overall well-being.
• I need to be aware of rebates when I begin investing into a managed fund next year.
• Private health insurance is quite beneficial because I earn more income.
• In the future as my finances get more complex I need to be aware that I only want to pay the amount of tax that I am obliged to, not less or more.
• It's better to get reimbursed for something rather than getting a tax deduction.
• Negative gearing at the present seems like a good idea because I don't expect to earn much interest on the cash in my bank accounts at the moment. Also mortgage rates are higher than savings rates.
• It's interesting about capital gains, that capital held for more than a year has a discounted tax rate, which is beneficial for investing in the long term.

Week Two Reflection

This week I completed Units 6 and 7.

"Lifetime Health Cover makes joining after the age of 30 worthwhile"

Comment: A remark which highlights something that I can apply in my future to save money and plan to establish once at the correct age.

"Keep receipts, photographs of items and asset register to provide evidence for a claim"

Comment: A routine I have already established with regards to the expense tracker for this course, will serve me well as I apply it to the contents of my house in the future.

"If you can't afford to buy, you can't afford a car"

Comment: This refers to 3rd Party Property Insurance, which seems to me like the most important insurance that can be b0ught with regards to vehicle insurance.

'Keep savings for car/holiday completely seperate to these 'investments'"

Comment: In regards to superannuation, this advice was quite interesting, but raised the question of where to keep the savings for car/holiday? If you keep them in an everyday account they are likely to be spent, and if you put them in a savings account the interest accrued from this account will be nullified when u withdraw the funds to pay for the car/holiday.

''Difficult to consolidate multiple accounts into one fund"

Comment: In regards to having multiple superannuation funds which is applicable to me. I believe I have super kept in multiple accounts, and my parents want me to divert these funds into a single account under Westpac, the company my mum works for. For future thoughts, completing this task may not be straightforward