Purpose-Driven Investing
Before making any investment, clarify your objective. Are you seeking passive income, capital growth, or a mix of both? This decision shapes your investment strategy and the types of assets you should consider.
Types of Investment Returns
Investments typically provide two forms of returns – income (like rental income from property or dividends from shares) and capital growth (the increase in value of your asset over time). Understanding how each return type works helps you align investments with your financial goals.
Accessing Returns
Income returns are usually received on a semi-regular basis (e.g., monthly rent), while capital growth is realized when you sell the asset. Shares offer flexibility, allowing partial sales, whereas property often requires selling the whole asset to access gains.
Tax Considerations
Both income and capital gains are subject to tax, but the timing and structure can impact your overall returns. Planning ownership to consider who will receive the investment income and capital gain at the point of exit will ensure you make informed decisions from the outset. Investment strategies with tax efficiency and flexibility in mind is crucial.
Investment Time Frame
Define whether your investment objective is short, medium or long-term. Your timeframe will influence the most suitable investment options and risk levels. If your investment goals are short-term then cash or a cash like investment might be the most suitable investment option. Whereas if you have a longer term timeframe then assets with a greater potential for capital growth might be optimal.
Seek Professional Advice
Consulting with an informed advisor ensures your investment choices are fit for purpose and structured to meet your objectives, both now and at the point of exit.
This blog contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Before making a decision about whether to acquire a product, please read the relevant product disclosure statement. If you decide to purchase or vary a financial product, your financial adviser, AMP and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.
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