Do I lose control of my money?

Not at all. You’re always in control. You decide which funds to invest in, depending on your investment objectives.

How do it work?

When you invest in a mutual fund, your money is pooled with that of many other investors. A professional fund manager then invests this pool of money in a wide range of securities. Mutual funds are divided into shares or ‘units’. Those units belong to the investors in the fund. The number of units you are allocated depends on how much you invest. Unit prices are usually set each business day, according to the value of the fund’s investments on the previous day.

What do it invest in?

Mutual funds can invest in all three types of financial assets – stocks, bonds and cash (money on deposit) all over the world. Some funds may also use other investment tools such as futures and options.

Can I get my money out quickly?

Mutual funds offer you liquidity and access to your money. You can buy and sell your fund investments on any dealing day (most business days). The redemption proceeds will normally be paid within 5-14 days after you sell.

Why should I consider it?

Easy – You decide which funds to invest in and then professional managers take care of all the day-to-day decisions, so you don’t have to watch the markets constantly.

Hassle-free – You do not have to spend time doing stock research or administration work, such as stock settlements and splits or foreign exchange, yourself.

Affordable – Start investing in global markets usually from a lump sum or through monthly investment plan.

Flexible – Tailor-make your own investment portfolio to suit your changing needs and circumstances with the wide range of funds on offer.

Good growth potential – With professional fund managers working for you to identify investment opportunities worldwide, you can diversify your investments and benefit from potential growth.

Risk reduction – Mutual funds generally invest in a wide range of securities, covering several different markets. This gives much more diversification than you can generally achieve on your own.

Liquidity – As you can buy and sell your funds at any time, you have full control of your investments and access to your money.

Pension Funds

A pension is any payment made to a retired person based on years of service. Most pension payments are made in the form of annuity payments that pay a set amount each year. A pension fund usually involves regular contributions by the employer to an investment account. The risks of investment are taken by the plan sponsor (the employer). The investment account requires constant management to ensure the success of the fund.

Insurance

It used to be that insurance companies were only associated with planning for the future as far as life insurance or health insurance to protect against emergencies. Life and health insurance are an absolute necessity when trying to ensure financial security. Disaster can strike at any time making it not only an emotionally difficult time for family, but also financially if not prepared. Insurance companies over the years due to increasing medical costs have begun delving into other areas of financial planning. Namely the offering of financial products like Mutual funds (to be discussed in a moment) and annuities that make saving for the future easier and more accessible no matter what the financial position or need is.

Mutual Funds

A mutual fund is perhaps one of the most popular means of long term investing and is the vehicle of choice in IRAs and 401k accounts. A mutual fund is basically a way of investing in a pool of different companies in order to minimize risk. A mutual fund investment can involve investing in stocks, bonds and other securities. The appeal of a mutual fund is the fact that a fund manager makes the decisions regarding what investments should be made. Usually with mutual funds, an investor can choose the level of risk they are willing to assume. Since the goal is long term investing, a degree of risk is acceptable since overtime the collective value of the stocks in a fund will grow.

Mutual funds utilize a number of different strategies in order to increase their value. The primary advantage of a mutual fund is that of diversification and professional management. Professional portfolio management isn’t something that a majority of investors have access to so it serves as not only a safer investment but also usually a more profitable one. It should of course not be assumed that a mutual fund is a completely safe investment since it still hinges on the stock market that is prone to fluctuations, but since the goal is long term investing those fluctuations should not have a great impact on the overall future of the fund.

Yes, there are lot of benefits when you invest, but are you sure you know all the intrinsic details about the investment? Here is a simple guide towards making your investment the smart way –

1. Figure out your goal well in advance: Many of us do not understand the mechanism of investing and how we should plan it ahead. With every mutual fund, you have to consider the performance of the fund and think about the factors which would cause a fluctuation. At the start of the investment, you need to figure out the growth points and how well it would appreciate over a period of time. How do you figure it out? Monitor the close and far notion points that may cause the performance and then predict what you can expect over the long-term.

2. What is the risk reward present?: Before you place your money into an investment, you need to figure out the risk ratio that is present. Would it be a conservative or aggressive mutual fund? Is it the risk you are willing to take? It would help you know the potential that you can expect.

3. Tax benefits are the icing on the cake: Similar to what you have with stocks and bonds, you can have tax benefits from investing in mutual funds. This should be considered when you are calculating the absolute returns or gains from the mutual funds investment. Consider the dividends and payouts that would be due your way too. Each addition or return on your investment would be significant about the growth of the fund.

4. The fund manager’s capabilities: It is quite important to know who is managing your money at all times, the fund manager should be credible and hold the right expertise. The performance of the fund scheme definitely is based on the quality of the management running it and before you invest; research about their past work and funds. Speak to people to know how well they have done; get to know their abilities from friends too. The market can be a very challenging place and you want to have the best people taking care of your money.

5. Is the long-term plan of the mutual fund investment strong? The best way to choose a fund is by planning it out for the long run. It has to bring returns to the investors and also mark the positives in the market – so choose the right portfolio parameters so that you do not go wrong.

With the right investment goals, you can get the best returns. You have to understand the reasons why the mutual fund would do well and the different support factors that will grow your investment. Your fund managers should be the strongest reason behind you deciding where to invest – it is their guidance and their understanding of the market conditions that will bring out the best for you. If you have been thinking about making money from your savings, there isn’t a better way than mutual funds.

Although the rating is not indicative of the amount a fund will grow or will perform, it is closely related. Judging by the history of the fund in which you are looking at you can often tell whether this fund will do the same or better than another similar fund.

If a two funds are of similar style and similar ratings they will normally tend to follow the same patterns. They will typically invest in the same types of assets and will usually perform on the same scale. Meaning that if one is making positive interest the other one should be too. And also the flip side that if one is losing money the other will normally lose money as well.

The style referenced above is essentially a term that is utilized by people in the mutual fund business to determine the majority of the stocks in which they invest. There are many different types of stock. There are mutual funds called large cap funds, small cap funds, real estate funds, cash funds, and emerging markets funds. These are just a few of the different style.

The key here is that not all funds with high ratings will perform the same as other funds with high ratings. For instance there can be a high rating placed on a real estate mutual fund and a high rating that is placed on a large cap fund. If the real estate market is declining then their fund will decline likewise. Also the large cap fund may be increasing because the market is good for those types of stock.

There is also the possibility that a large cap based mutual fund with the same rating of another large cap mutual fund will not perform in the same manner. For instance there are two different types of cap funds. One is the growth fund and the other is called the value fund. They are different in the fact that they focus on different types of stocks and thus they can perform differently than each other.

Many of us face difficulty in choosing the right investment plan and thus end up taking a wrong or inadequate decision. Therefore, it is quite essential to do in-depth market research and analyse various parameters prior to investing. But before we go for research, we must know about the different factors which we need to study and analyse. Here are some of the major elements one must contemplate while taking an investment decision in the mutual funds:

Tip #1: Know Your Goals

Different investors have divergent investment goals which are either short term or long term in nature. So at first, every investor must know why he/she wants to invest in a mutual fund. A set target helps one in opting for the most suitable investment strategy. Furthermore, when you know your goals and risk appetite, you take the right decision at the right time which leads to greater benefits and higher returns in the future. According to the set objectives, you may choose the best mutual funds which either fall under the equity, debt or hybrid funds category.

Tip #2: Evaluate Various Fund Houses

Once you are done with setting up your investment goal, next you need to evaluate the asset management companies (AMCs) which provide the top-performing mutual fund programmes. There are a large number of fund houses which are indulged in the process of designing the best mutual funds for the investors on the basis of market analysis in order to cater to their needs. While investing in these programmes, we give a mandate to the fund houses to manage our money on our behalf and invest the same in the most efficient plan. Hence it is quite essential to get an insight of the AMC before handling the money to them.

Tip #3: Have a Look on the Funds’ Performances

Every investor has a common objective which he/she desires to achieve from the investment, i.e., returns. Accordingly, one must know the capacity of the scheme to yield desirable profits in the considerable time period. Although past performance cannot determine the future returns of a scheme, it gives a gross idea about the capability of offering higher profits. Once you analyse the track record, you feel confident about investing your hard-earned money in them.

Tip #4: Consider the Loads & Other Expenses

To take a remarkable investment decision, one must check all the relevant parameters that may affect it, wherein cost is one of the major concerns. There are different loads associated with the mutual fund investments as well, which need to be considered before investing. One must evaluate the same and confirm that they are affordable and worth making. The exit or entry loads may increase the overall cost of investment which causes a negative impact on the future value of invested capital as well.

Tip #5: Assess Diversification of the Fund

It is always suggested to put the money into divergent schemes to reduce the risk exposure. One must make sure that his/her invested money is fully diversified to offer maximum returns with minimised risk. The best mutual funds also consider the same thing and make wide diversification of the investors’ capital. One can invest the capital in such programmes to yield aspiring profits for a financially stable future.

Tip #6: Remain a Consistent Investor

It is always easy to invest in funds but it is tough to keep going. However, one must remember that to earn fruitful returns from the best mutual funds, one needs to stay regular. For that, the Systematic Investment Plan (SIP) is the most apt alternative as it provides a convenient method for being a disciplined investor by making small amount payment on a recurrent basis. With this, one shall be consistent in investing and gain substantial returns thereof.

Bottom Line:

Investment decisions are crucial and must be taken with efficiency. The top mutual funds yield highest profits and hence, must be opted by every investor for his/her portfolio. The factors mentioned above shall help you in opting for the best mutual funds to make a worthwhile.

Superannuation refers to the arrangements people make to accrue funds to replace their income during retirement. Luckily, superannuation is government-supported and encouraged and minimum provisions are compulsory for employees. In addition, employers are required to pay a proportion on top of an employee’s salaries and wages. Sadly, there are still cases when individuals make mistakes about superannuation. Advisors in superannuation present some of the following issues.

Having multiple super funds

One of the most common mistakes about superannuation is having multiple super funds. Of course, some individuals may think that they can gain better funds for their future. However, with all the fees and insurance premiums you need to pay in those accounts, you may even cut your savings. So, make sure that you only make use of only one account.

Poor investment choice

The next mistake in superannuation is choosing the wrong investment. Surely, most individuals wish to gain the best benefits from their finances. However, you also need to consider some factors. For instance, if you are about to retire in a year or so, it is not ideal to invest your money in high growth markets since you may lose all your money in an instant. Thus, choose the right investment that can help you make your retirement more rewarding.

Wrong insurance

Another mistake about superannuation accounts is opting for the wrong insurance. Most accounts have default insurance for you. But, there are cases when insurance cannot match your needs. So, invest in time to look for insurance options that can match your needs and the lifestyle you are looking for.

Relying on super guarantee

Super guarantees are given by employers to their employees as a default superannuation fund. Unfortunately, some employers only rely on super guarantees. This is a good choice, but with a new breed of default superannuation funds, with lower costs and standard insurance benefits, you might be missing out some of the best deals to make your funds better.

Although APRA must be satisfied that your application meets the criteria for early release of superannuation under specified compassionate grounds, the final decision rests with the trustee of your superannuation fund. As a first step, you should contact your superannuation fund to make sure it will allow the early release of your superannuation benefits. Regardless of APRA’s approval you will not be able to access your benefits if your fund does not allow the early release of superannuation. It is up to your superannuation fund trustee (or RSA provider) to decide what benefits they will and will not release. Further, the superannuation fund trustee/RSA provider may also charge you fees for the early release of your superannuation. This seems very strange in that although APRA has guidelines in place, superannuation funds don’t have to allow early access to super. It makes it important that when choosing a superannuation fund that you choose one which allows flexibility in times of need!

The first step in trying to access your super is to make contact with your Fund, if your fund does indeed release funds – you will need to comply with the requirements of APRA. There are a limited number of circumstances in which your superannuation can be released early. The reasons for early release of superannuation are called ‘grounds’. Different grounds fall under the responsibility of different organizations. An overview of the “grounds” and relevant responsibilities follows:-

APRA

APRA may give approval for the release of superannuation funds if you need the money to:

o pay for medical or dental expenses, for you or a dependent of yours;

o pay for transport to medical or dental treatment, for you or a dependent of yours;

o prevent your home from being sold by your financial lender which holds the mortgage;

o modify your home or vehicle to accommodate your own needs, or the needs of a dependent, in the case of severe disability;

o pay for expenses associated with caring for a person with a terminal medical condition (i.e. palliative care), be it for yourself or a dependent; or

o Pay for expenses associated with a dependent’s death, funeral or burial.

You should be aware that “specified compassionate grounds” generally do not include payments against vehicles, utilities, credit cards or other personal debt are not “specified compassionate grounds”. If your situation falls into one of the above scenarios, you will need to complete the application form provided by APRA or available on the website. You will then need to provide detailed evidence to support your claims. The application form details the types of evidence necessary. Examples of necessary evidence however will alter depending on the circumstances under which you are applying for the early release of your benefit but can include medical certificates, supporting letters from your doctor, supporting letters from your financial institution, details to validate your financial position etc. When you apply to APRA for permission to access your benefits, their staff will assess your application and decide whether your situation fits within what’s allowed by the law. Essentially though, APRA staff generally cannot exercise any discretion or make special allowance for early release, whether they would personally like to or not.

Trustee/Provider

Your Trustee/Provider may allow access if you:

o are experiencing severe financial hardship;

o have been permanently incapacitated (permanent and total disability);

o are terminally ill; or

o have a preserved benefits balance of $200 or less.

Again an application will need to be made accompanied by supporting evidence. However, if you are terminally ill, you can access all of your benefits tax free.

ATO

If you were in Australia temporarily and are now leaving the country for good, you can apply to the Australian Taxation Office (ATO) for early release of benefits. You may also be able to access your super early if you have funds in a Superannuation Holding Account Reserve (SHAR) and are experiencing severe financial hardship.

Centrelink

If you have been receiving an eligible income support payment from Centrelink, you may be able to apply directly to your superannuation fund/RSA for early release.

The Superannuation Fund and APRA will not simply allow you to access your benefit unless you can categorically prove that your circumstances are dire and meet the intentions of the legislation – so you must prove beyond doubt that access to the benefit is absolutely essential. Prepare your case carefully and thoroughly and provide supporting documentation.

These harsh financial times are going to affect thousands of Australians – accessing your superannuation early maybe the one avenue that keeps your head above water.

Plan For Your Future With An Investment

Mutual funds can be a lot less risky way of investing opposed to the stock market, and as a result, more people are likely to invest in them. Diversifying your portfolio is a great plan. Spreading your money out protects you by not putting all your money in one place. Hiring a professional has its advantages. Having someone else worrying about your gains and planning is a good idea. These people will make decisions based on your goals in your behalf.

Margin For Error

These funds are inviting to companies as well as individuals, attracting people from all walks of life. But not everyone can be a winner. Some place their money with the wrong companies and lose. Many invest in top mutual funds from magazine articles, and don’t know any better. This is a common error for new investors and not a good idea.

Projections Can Be Misleading

Avoid projections and focus on ratings. Looks can be very deceiving, with the rankings and figures promising great gains. If you trust them mistakenly and make them the basis of your future investments, the result could be tragic. Ratings are only there to represent the past and present behavior and in no way predict the future; they are not a reliable way of predicting future results.

Past Performance Does Not Predict Future Gains

Take Morningstar for example. When comparing the past performance with the current performance, none of the current names appear to be on both years. Each and every year the names and figures would constantly change and jump around. Top mutual funds this year, or even this month, may end up duds next month.

The Big Advantage

Mutual funds don’t require a huge amount of money. This is why some many people are now moving toward this type of investing. They can be a less risky way to save for your future, and a great way to diversify your investment portfolio. Diversifying your portfolio is key to protecting your investments.

And even if you have some interest you only need to make small deposits into your super fund or health account to reap significant benefits in the distant future.

But let’s say you are 50 years old and you don’t have any super. Then you will need to make large deposits to have a decent retirement.

Equally if you are 50 and you haven’t cared for yourself as well as you could have then you will need to make big changes in order to be healthy enough to enjoy your retirement.

I recently turned 60 and even though I pride myself on being fit and health, partly because it’s my job to do so, I realised I needed to make a few more changes. My goal is to be as fit and well at 70 as I am at 60.

When I was 20 I could easily devour a family size pizza, now 2 or 3 pieces is enough volume wise, but now I choose not to eat pizza at all, because there is not a single morsel of it that will be me any good at all.

Even though I consider myself to be very healthy I know for a fact that my body cannot process the foods a twenty something can and expect to remain well. Sugars, omega 6 industrial oils, junk food and more than a moderate serve of alcohol is going to hit me hard.

Driving inflammation, circulation problems, stressing my joints and organs, disrupting my cells and damaging my mitochondria and thereby reducing my energy.

All of this from eating food which in real terms is just junk. Of course if I eat like that I won’t have the energy to exercise and the couch will become my friend. Plus my mind will be dull and I will certainly increase my chances of Alzheimer’s disease and dementia.

The bad news is that you can’t turn back time, but the good news is that you can slow the aging process, how much is the question. It will depend on how badly you have treated your body and how willing you are to support it.

If you want a good future you will need both money and health, that is the stark reality of life in the world we live in.

The cut-off limit has effectively been cut in half from last financial year, so if you’re under 50 and had planned to put a little extra into your super as a way to help reduce your tax liability, it’s important you’re aware of the limits and caps that have been put in place.

However, if you’re over 50, you’re able to only contribute $50,000 this financial year, instead of the $100,000 that was allowed last financial year – once again a cut of 50%.

Keep in mind that concessional superannuation contributions include the amount paid into your super fund by your employer, which include any amounts paid under salary sacrifice, as well as personal contributions claimed by self-employed people.

While most people might think that this sounds like a lot of money to put into super each year, the truth is the amount paid into your super fund by your employer is counted towards this total figure, as is the amount paid via salary sacrificing.

If you’ve had a pay rise throughout the last financial year, you may be closer to the threshold limit than you think.

For those people who go over the cap or limit amount for their age group, instead of paying 15% tax on your contributions, you’ll be penalised with a tax rate on the excess amount of 31.5%.

These new limits and caps on the superannuation contributions you make mean that as an individual you have the option of working out how much you wish to contribute into your super fun to reap the maximum benefits available for you. At the same time, you’re also able to benefit from the compounding returns over the long term if you’re willing to plan that far in advance.

However, it’s important to be careful about the amounts you wish to contribute without being hit with a higher tax rate on contributions made that are above the allowed super contribution cap limits.