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.