Do You Really Want Your Investments To Increase In Value?

It depends on your wealth accumulation “stage”

Nearly everyone who purchases an investment, be it shares or property, wants to see it immediately rise in value. And the more the better. It justifies the investment decision and makes the investor feel wealthier.

However, while it might make you feel good, it may not be in your best interests for investment markets to rise strongly. What you want to happen depends heavily on your wealth accumulation “stage”. This is assessed by comparing how much you expect to be able to commit to investment markets in the future (i.e. your projected surplus or future capital) with your current net investment wealth (your net worth less your lifestyle assets).

If most of your wealth accumulation is ahead of you, then rising investment markets mean that you will be buying into those markets at increasingly higher prices. Your money does not go as far.

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The Mechanics of Managed Funds: Tips and Traps

Managed funds: a time tested financial innovation

Managed funds (or their U.S. mutual fund counterparts) are the primary vehicle for the majority of individuals’ investments in share and fixed interest markets and, to a lesser extent, property markets. By pooling the funds of many investors, they offer a number of potential benefits (compared with an individual investing directly in the relevant asset class).

These include:
* Diversification across a broad range of individual investments;
* Economies of scale and reduced transactions costs; and
* Access to professional fund managers.
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