EBS Financial Management Services Pty Ltd
 

Investment Overview

In today’s economic climate of low interest rates and uncertainty on global stockmarkets the three most important considerations for investors are performance, security and diversification, incorporating the ingredients of Capital Growth and Income Producing.

Income producing Investments

Interest bearing Investments generally offer the advantage of high security of original capital. These investments include bank deposits, term deposits and debentures with major finance companies.

The disadvantage of interest bearing investments is that their returns are taxable and there is no capital growth. For example, if you were to earn 9% per annum and your tax rate was around 40% your after tax return would be only 5.4% per annum.

Thus, some income-producing investments provide good security of original capital but no additional growth potential to maintain purchasing power. Alternatively property is one of the most solid forms of investment, providing capital growth and income.

Capital Growth Investment

Capital growth investments include property investments, Australian share market investments, and international share market investments as well as a huge range of more specialised investments (pine plantations, collectibles, future contracts etc). We do not deal in unduly risky investments.

Capital growth investments reflect an increase in the capital value of the asset purchased, whether the investment be direct in real property, shares or similar, or by indirect investment through a unit trust or similar managed investment vehicle.

There are two major advantages of capital growth investments. First, by diversifying into economic sectors other than fixed interest it is possible to take advantage of favourable investment conditions that provide superior growth over the medium to long term. Second, capital growth is subject to capital gains tax that is based on the real rate of return (i.e. discounted for the effects of inflation.) Capital gains tax is therefore much lower than comparable income tax, A very important factor relating to capital gains tax is that it is not payable until the investment is sold, thus any tax liability is deferred into the future at which time lower personal tax rates may apply.

To summarise the above, capital growth investments enable the management of your taxation position to suit your circumstances.

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Equities

Leverage your way to wealth

  • Diversify your investment and increase your capital returns.
  • To capitalise on daily investment opportunities, use the equity in your shares, property and/or managed funds.
  • Enjoy the flexibility of a Margin Loan from Leveraged Equites and you too, can begin to leverage your way to wealth.

By borrowing against your existing assets, you can take advantage of other investment opportunities as they arise. This is leveraging your investment portfolio.

Leveraging your portfolio has become a popular wealth creation strategy, however leveraging also increases your investment risk as well as incurring an interest cost.

Many Australians are leveraging shares and managed funds as well as leveraging investment property.

A “helping hand” to the growth of your net assets, not generally taken into account, is that gains on your leveraged portfolio are not taxed until sold. The interest costs may also be tax deductible each year.

The most important factor is to select the right securities and investment structure for your own personal situation. It is vitally important to speak to your broker and/or financial advisor before leveraging into managed funds, stock market and/or Property investment.
EBS Financial Services can assist with financial planning.

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Managed Funds

A well-structured investment portfolio centres on the principle of diversification, an exposure to a range of investments operating in different markets. The two main ways of achieving this are firstly, to choose an allocation to specialist investments operating in a single investment market (e.g. A Property or share trust), or secondly, to use Managed Funds, which invest in a mix of investment markets within the one unit trust structure. Managed funds offer the advantages of:

  • Access to the skills of a professional investment manager in choosing an optimal investment allocation
  • Less surprises than specialist funds
  • Easier management of paperwork and taxation details
  • Savings plans to allow regular investment into the fund
  • Greater security of original capital than specialist funds
  • Wealth accumulation prospects representative of the portfolio as a whole, rather than the varying performance from specialist funds.

Australian share market Investments

Traditionally, share market investments are the highest growth of all investment markets with historical returns well in excess of inflation. Therefore, equity investments form an important part of every investment portfolio in order to assist with combating the effects of inflation. Share market investments are, however, the most volatile of all investment markets. They should be regarded as medium to long-term investments unless short-term speculation is desired. Despite the attractive historical returns, the proportion of share market investments should be such that the overall value of the investment portfolio is guarded against the effects of these variations. Investments in growth related share markets funds rely on the capital value of each share in the portfolio increasing. These increases are reflected in the unit price of the funds by frequent revaluing of the share portfolio. Equity growth funds generally have a low-income level, which is incidental to the main purpose of the fund, that of obtaining capital growth.

Property Funds

The portfolio approach to investing suggest that a well structured investment portfolio should have at least some exposure to the four major investment markets at all times, including property.
Property trusts are almost wholly invested in commercial, industrial and retail property and returns have been reasonable, their main advantage being that they move in an entirely different business cycle to the other sectors and thus returns from property trusts investments will assist a portfolio at times when interest rates are low and the return on shares is also disappointing.

Fixed Interest Securities

Fixed interest securities offer a high level of security with regular income. These investments include deposits with major banks and Government and Semi- Government bonds, as well as debentures with finance houses and mortgage trusts.

Managed Stable Funds

In these funds, a dominant investment is made in cash and fixed interest securities to under pin the value of your original investment. The remainder of the portfolio is allocated to a mix of share and property investments. While the value of such funds may fall slightly over the short term, it is most unlikely that this will continue over the medium or long term. Performance prospects for stable funds are moderate.

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Superannuation

The power of super

As well as being perhaps the principal or sole source of your future income, superannuation may be the single largest asset you may ever have, apart from your home- so it is worth giving it some thought!

Superannuation

For assistance with DIY Superannuation (Do-it-Yourself) investment strategies register your interest here.

Top up your super

While the government makes it compulsory for employers to contribute to their employees, super an amount equal to 9% of salary. Employees can make additional contributions. These can usually be deducted directly form your pay or bank account. Automatic deductions make it easy to save. You do not see the money so don’t have an opportunity to spend it.

Consolidate your super

If you have held several different jobs, you may end up with many separate funds. Rolling all of it together into one easy to manage fund can create a more focused investment strategy, and just one set of fees. At EBS Financial Management Services PTY LTD we can assist. Click here to contact us.

Unclaimed Investment

In a few short years there is now more than 7$ billion wallowing in neglected superannuation accounts.

The Australian Securites and Investments Commission (ASIC) is holding $160 million in dormant bank accounts, $45 million in unclaimed company shares and $23 million in unclaimed life insurance policies.

Check your situation on www.fido.asic.gov.au
EBS Financial Services can assist you to consolidate numerous superannuation accounts and retrieve missing funds.

To request assistance please contact us.

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Financial Planning

Worth thinking about

Just as everyone has different ideas about retirement, your financial plan should be individual – yours and yours alone.

Your Future is a priority

Establishing a financial plan for your retirement, however distant, should be a priority. Accumulating the funds you will need to support you, takes time.

If you think it is too hard to deal with, or too far in the future, you need to arrange a visit with a Financial Planner. EBS Financial Services can assist you.

Where, What and How

Committing yourself to a retirement plan is easier when you have some idea of the life style you seek to enjoy. Therefore, you need to think about where you want to be and what you want to do in retirement.

Writing down on paper the three things you most want in life, when you retire, can clarify your ambitions. It is important to be realistic. Make plans that are achievable and you will find it easier to work towards them.

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Business Opportunity

Whether we are employed, self-employed or otherwise we are usually on the lookout for additional opportunities that will improve our present circumstances, help us to achieve our goals and fulfil our dreams.

We at EBS have been in the business advisory field for over 30 years and have helped thousands along the way to achieving their dreams.

In an ever-changing society, opportunities are all around us sometimes we need help to recognise them, get into the slipstream of that activity and reap the rewards.

We have opportunities available. Click here to register your interest.

Some business opportunities demand very little cash outlay. The success of any venture is mostly dependent upon the input of time and energy.

For those on fixed incomes in the present climate of devalued assets that are held in Mortgage Funds- capital losses-diminished incomes, opportunities that require very little capital outlay could be a savior.

Super investments have deteriorated over the past three years with little hope of any marked improvement in the near future.

Our Business Building team at EBS can help and guide you along the way.

Register your interest by clicking here.

Quotes worthy of note:

  • Life is what we make it, always has been, always will be
  • When you get right down to the root of the meaning of the word “succeed” you find it simply means follow through
  • Some succeed because they are destined to; most succeed because they are determined to
  • If you wait for perfect conditions, you will never get anything done
  • Listen attentively. Successful people are listeners
  • Success is the progressive realisation of a worthwhile goal or dream
  • The size of your success is determined by the size of your belief

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FAQ

Investment Management information

What factors should be considered before making investment decisions?

Each investment has its own range of possible investment returns and level of risk.
When you make your choice, consider:

  • How long you will be investing
  • The level of returns that you are seeking
  • The level of short term volatility that you are prepared to accept
  • The taxation implications

Financial Advice

We recommend that you consult a licensed financial adviser and a taxation adviser to help you determine the best mix to achieve your personal investment goals.
EBS Financial Services can assist you. Click to contact us.

Investment & Performance Risk

All investments involve a degree of risk. Investors should note that the performance of each Fund is dependent upon the performance of the underlying assets of each Fund, which can fall as well as rise in value. Investment returns are affected by many continually changing factors, such as economic and legislative changes, capital market fluctuations and investment management issues. These factors can cause fluctuations in the unit prices and income distributions of each Fund, as well as give rise to profits or losses on redemption of units.

The minimum suggested time horizons and the risk profiles for each Fund are determined by an analysis of historical performance of the respective underlying assets and take into account each Funds investment objective.

The returns for each Fund represent historical performance only and past performance is not a reliable guide to future returns as future returns may differ from and be more or less volatile than past returns.

Retirement

Retiring is all about living the lifestyle you are comfortable with, and doing the things, you have always dreamed of doing. We can show you how structuring your investments a little differently can help you and your partner enjoy your retirement.

Example
By investing your superannuation in annuities or pensions, you could qualify for a 15% tax rebate on your investment.

If you are single with assets of at least $150,000 or a couple with $250,000 we can help you understand, the new rules for tax and social security entitlements.

In meeting with a financial Adviser, they will show you how to:

  • Work out how much income you need to live on
  • Choose the right investments to ensure your retirement income lasts as long as possible
  • Maximise the tax concessions and social security benefits you are entitled to
  • Structure your investments so you still receive a government pension.

An adviser will assess your situation and provide you with a personalised recommendation. To learn how to maximise your retirement income, please contact us.

Negative Gearing

Gearing is the use of borrowed funds in order to purchase an investment. Negative gearing means that the cost of borrowings is not covered by the returns generated by using the borrowed funds. For example, you have borrowed money from a bank to buy a house for investment and the rental income from that investment is insufficient to cover the interest and repayments on the loan and expenses of maintaining the property on an annual basis. The advantage is that you receive a tax deduction for the excess expenses, which reduces the impact of the repayments on your cash flow.

Gearing involves borrowing that introduces the traps of borrowing. It is important that you understand the following in relation to borrowing for investment purposes

  • Borrowing for growth investments are generally a long-term investment.
  • Interest rates may increase over the term of the investment, therefore creating a greater impact on your cash flow.
  • Investors should ensure that they could afford the full repayments to cover periods where income from personal exertion may not be forthcoming.
  • Ensure that the loan you take allows for early repayment with minimal penalties.
  • Borrowing will magnify your investment returns both positively and negatively.
  • Borrowing will magnify your risk exposure to the investment markets.
  • Your income should be protected with salary continuance to make repayments should the borrower fall ill or have an accident
  • If in any doubt separate advice should be obtained from your accountant.


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