Do you understand the equation between Investment Risk and Investment Return?

In broad terms, the greater the return you expect from an investment; the greater the risk there is of losing your initial stake or outlay.
The basic asset classes are set out below, with risk and return expectations for each major class.  However, there are differing standards of asset within a class, so the estimates are not definitive.



Cash & Cash Equivalents

Cash generally refers to investments in bank bills, debentures and similar securities which have a short investment timeframe.  They provide a stable, low risk income, usually in the form of regular interest payments.  
Suggested Investment Term:
0-12 months
Low Risk; Low Return



Fixed Interest

Mostly government bonds, corporate bonds, mortgages and hybrid securities which typically operate in the same way as loans.  The income return is usually in the form of a regular interest or dividend payment for an agreed period of time.  
Suggested Investment Term:
12 - 36 months
Low Risk; Low Return



Australian Shares
A share represents part ownership of a company.  Shares are usually bought and sold on the stock exchange.  Returns usually include capital growth (or loss) and dividend yields.  Dividends may be franked. (i.e. Tax may have been already paid.)

Suggested Investment Term:
5 - 6 years
Med-High Risk; Med-High Returns



International Shares
Similar to the Australian share market but with the greater diversity and opportunity to invest in companies in a much broader range of countries.  You can also invest in shares not offered in the Australian market, such as Microsoft, Google or Apple.  However, currency fluctuations can negatively affect performance.
Suggested Investment Term:
5 - 6 years
High Risk; High Returns



Property Securities
Property securities are shares in property investment trusts listed on the stock exchange.  They usually represent a basket of commercial properties selected from an industry sector, such as retail, commercial, hotel or industrial property groupings.  They may also be invested in assets across a diversified property portfolio.
Suggested Investment Term:
5 - 6 years
Med-High Risk; High Returns



Property Investment
Investing directly in property is almost the Australian pastime.   Australians have embraced property investment like practically no other nation on Earth.  However, there are things that many investors should be doing from the outset, to protect their investments and to establish long term investments that can become intergenerational assets.
Suggested Investment Term:
7 - 20 years
Medium Risk; Medium Returns

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