Why shares can be a good investment option
Investing in shares is beneficial because you don’t need the huge amount of money to get started unlike buying a property. You can invest as little as $1000 in the sharemarket either directly, through a managed fund or by a stockbroker.
Once the initial investment is made you can then build up your share portfolio by making other small contributions either regularly or when your savings have increased. Then if you need your money quickly it is relatively easy to sell shares compared to a property.
Past returns for Australian shares have also been favourable as outlined in the chart below when compared to a property.
Source: ING Advice Research, Australian Bureau of Statistics and Morningstar.
Investing in Australian shares also means you can choose the type of investment. For instance some shares offer more income, while other offer more capital growth. You will also need to consider the degree of risk you are willing to accept over the short term as some growth and income shares may be riskier than others.
Alternatively fund managers of a managed fund can do the research for you. These managed funds invest in mainly growth (such as a capital growth managed fund) or shares that provide dividends and growth. Some fund managers actually specialise in particular areas and you can take advantage of this expertise.
The income from shares may also be more tax effective if it is franked but it is worth checking with a financial adviser.
It is important to note that shares may be more volatile in the short term but generally as a long term investment, of five years or more, they have had good performance.
For more information on investing in Australian shares, please contact your RetireInvest financial adviser.