Several Australians feel the need to have additional income or expand their capital over time. Hence, they delve into investments to find additional sources of income or grow their investment over a period. You may be looking for investment opportunities in Australia too.
You can invest in various options with different financial goals and returns on investments. For example, you may find cash investments, shares, investment bonds, ETFs, and much more. Each investment type has different risks and returns.
This post comprehensively discusses investment opportunities in Australia. Read on and grow your capital.
Top Investment Options in Australia
Several Australian investors will vouch that investing in different mediums can diversify and enhance your portfolio. The Australian investments account for 22.3% of its nominal GDP in 2021. Thus, many Aussie investors are pooling in and exploring various investment options available.
The following is a list of top investment options in Australia.
If you wish to have a stable, low-risk income, cash investments such as savings accounts and term deposits are ideal for you. Essentially, the Aussie investors get income in the form of interest payments. Cash investments are suitable for short-term goals.
Purchasing a share in Australian companies makes you a shareholder or a part of the company. As the shares grow, the company value grows, and the profits would increase. Hence, you would receive a hefty dividend.
You can hire a financial advisor to help you study the Australian market and invest accordingly.
Exchange Traded Funds (ETFs)
The exchange traded funds are managed funds that you can buy and sell on an exchange, such as the Australian Stock Exchange. The ETF tracks a market index or a particular index.
The value of your investments, ETF, will grow or decrease according to the index it is tracking. Many Australian investors have started exploring this type of investment option.
An Australian investment management company overlooks the funds collected by Aussie investors like you after you invest in a growth bond. The profits earned by the company can be beneficial for the investors too.
Investment Bonds are one of the most preferred investment options in Australia. This is because Aussie investors find an advantage in having their funds managed by experts.
Categorizing the Investments
Investment opportunities in Australia are categorized into two: defensive and growth. You need to have a financial goal, investment time frame, and risk tolerance. These aspects will help you understand which investment is suitable for you.
Take a look at the two major categories of investments in Australia.
If you wish to invest with a lower risk, you should opt for defensive investment. You can generate income and protect the capital invested.
Defensive investment can be used to meet your short-term financial goals. Additionally, you can diversify your portfolio with these types of investments.
Back account, high-interest savings account, and term deposit are cash investments. You can protect your wealth and diversify your portfolio with this type of investment.
- Average return over last 10 years: 3% per year
- Time frame: short term, 0–3 years
- Risk: Very low risk
Corporate bonds, debentures, government bonds, and capital notes are fixed interest investments. You can earn a steady rate of income with this type of investment.
- Average return over last 10 years: 3–4% per year
- Time frame: short term, 1–3 years
- Risk: Low risk
In these investment types, you are offered a higher potential return although the risk is higher. With these investments, you can experience capital growth and earn income in some options.
You can meet longer financial goals.
Investing in commercial and residential properties. You can earn income, such as rent, and experience capital growth over a period.
- Average return over last 10 years: 6.3% per year
- Time frame: long term, at least 5 years
- Risk: medium to high
Investments in shares of a company. You choose a company’s management with your vote and get to have shares in profits. The income you may earn is the dividends.
- Average return over last 10 years: 6.5% per year (Australian shares)
- Time frame: long term, at least 5 years
- Risk: high
Private equity, commodities, and infrastructure are some common alternative types of investment. These investments have a goal to provide capital growth.
- Most alternative assets are high risk.
- Returns differ depending on the type of alternative investment.
Australia has many options of investments and opportunities to diversify your portfolio. Many Australian investors prefer to invest in a longer timeframe and grow their income or capital over time.
Do you wish to join other Australian investors and grow your income? Consult a financial advisor and learn the right investment plan for you to get started!