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Investment Education

Australian Equities Market Insights
David Langford (ING Investment Management) Head of Research - Australian Equities, discusses the outlook for the Australian share market on the back of results from the recent corporate reporting season as well as macro economic and financial market trends. Watch Video (running time approx. 8 minutes)
ITC - Investing via a SMSF
Objectives:
1
. Fund additional superannuation contributions via a salary sacrifice.
2
.Diversify portfolio assets to reduce the risk of future portfolio volatility.
3
. Make a positive contribution to the long term generation of investment wealth.
ITC - Reducing HECS debt strategy
Objective: As part of the implementation of this strategy, the client uses the positive cashflow created in the first year to make a voluntary repayment against HECS debt which they have outstanding. This voluntary repayment attracts a 10% bonus payment from the government, which can be added to the yield produced by the forestry MIS investment.
The Role of Agribusiness Assets in Investment Portfolios
Investment in agribusiness assets has grown significantly in recent years. The question of interest is whether including agribusiness assets in investment portfolios provide benefits. The effects of diversification by including agribusiness assets in two investment portfolios, a mixed asset portfolio and a diversified share portfolio was investigated using Markowitz’s (1952) Modern Portfolio Theory (MPT) of mean-variance optimization.
Farm forestry could drive biofuel for transport
Forestry can best contribute to fighting climate change in Australia by mass planting of trees on farm land to provide biofuels for transport, according to a researcher.
Market Volatility – Frequently Asked Questions
The recent sharp negative performance of equity markets around the world and the questionable financial viability of several companies, has many investors concerned about their own investments.

At times of such market uncertainty and negative sentiment, people often think the worst. The following information is aimed to dispel some myths and to provide an update in relation to client investments.
Important Notice - Know Your Client
From 12 December 2007, the ‘Know Your Client’ (KYC) requirements of the Anti-Money Laundering and Counter Terrorism Financing Act (AML/CTF Act) require designated service providers (which includes financial advisers and product providers) to collect and verify clients’ identification (ID) information.

The purpose of the AML/CTF Act is to monitor financial transactions and to capture client information in a way that will help detect and prevent money laundering and terrorism financing.

At this stage there is no consistent policy in place for the fund management industry. Some fund managers may not accept any new business without the investor's identity being verified, whilst others are using a transition period to implement the new regulations. As a result additional identification documents may need to be provided with investment applications. Investors should check the instructions for completing application forms and any identity document requirements provided in the product disclosure statement.

The complete AML/CTF form for individuals can be downloaded by here.
Dec 2007
ASIC Managed Funds Calculator
Compare different managed funds and the impact of management costs on your rates of return. The calculator works for most types of managed funds. It does not work for insurance bonds, friendly society bonds, similar ‘tax paid’ investments, or retirement income stream products.
Investment Goal Calculator
This calculator helps to estimate whether or not you are on track to reaching your investment goal, taking into account your current savings plan and required investment period.
Does Agribusiness Improve Portfolio Performance?
An analysis and discussion of the impact of agribusiness in a portfolio by Australian Agribusiness Group (update 2006/07).
Investors in Australia have traditionally overlooked and underinvested in agribusiness because of perceptions of high risk and poor returns. This paper investigates these perceptions and demonstrates that quite the reverse is true.
26 years of data for Australian shares, Australian cash, Australian 10-year bonds, Australian listed property trusts, international shares and international bonds were compared against agribusiness as an investment.
The Top 25% of agribusiness can produce returns better than the All Ordinaries.
Returns from Top Agribusiness is substantially less volatile than the All Ordinaries.
Agribusiness is negatively correlated to other asset classes.
The addition of agribusiness to a portfolio can increase returns and substantially reduce volatility.
Well managed agribusiness is a sensible choice when considering diversification for a portfolio.
How much super is enough
What kind of income would you like when you retire? Do you know how much super will provide that income? Will employer contributions be enough? Should you contribute more now?
Mortgage Funds - the income alternative
The aim of any income fund is to provide regular earnings while protecting capital. Cash funds have been a popular income stream but this guide shows how mortgage funds are becoming increasingly popular to attain regular returns on investment.
The perils of market timing
Spreading your investments around –or diversifying—is one of the best ways of reducing investment risk and improving your chances of achieving a more consistent investment return.
Why you shouldn't chase last year's returns
We all want to pick a winner with our investments but chasing last year’s performance isn’t the way to go about it. Learn how to avoid common hazards and helpful alternative strategies.
The real value of investing internationally
Investing in international shares can provide greater diversification, more exciting investment opportunities and stronger long-term performance than investing only in the Australian sharemarket.
Managed funds
Over nine million Australians have discovered the benefits of managed investments –one of the world’s fastest growing investment categories. Learn more about them in this guide.  
Investing for low risk income
Not all investments carry the same risk levels. Learn about typically stable investments like cash management funds, mortgage funds, term funds and fixed interest funds here.
Residential investment property or listed property trust?
Australian investors are passionate about property as investments but tend to focus primarily on residential property. See the alternatives here.
Oxford Dictionary of Australian Investment Terms
Managed Investment Scheme
A type of investment vehicle that pools the assets of multiple investors into a single vehicle with a common investment objective and strategy. The investor’s interests..... Click here for more on this and other terms.
LawCentral
LawCentral provides essential services like Legal Tutor, Bulletin Bookshelf, Affiliate Club, Authors Club, Featured books, Legal Brief, Legal Dictionary and Platinum Membership.

LawCentral offers a simpler solution to making your own documents. By following our easy to use question wizards, you can complete your own legal document within minutes. Lawyers prepare all of our documents and logic flow. Law Central Co Pty Ltd is not a law firm. It does not give legal advice.
Wealth Creation Strategies
  mortgage acceleratory strategy
  mortgage reduction strategy
  mortgage elimination strategy
  building wealth tax effectively
  capital gain tax management
Managed Funds: What is a managed fund?
A managed fund pools your money with money from other investors to form an investment fund. Specialist investment managers then invest the money in the fund on your behalf.

Managed funds come in many shapes and sizes. Some funds invest in just one type of investment such as Australian shares, international shares, cash or mortgages while others known as diversified funds invest across a range of asset classes including Australian shares, international shares, fixed interest, property securities and cash.
Your Investor Profile: Understanding Investor Risk Profiles
Your choice of fund will also be affected by your investor profile, which is a combination of factors - your investment experience, your attitude to volatility, and your investment time frame.
Share Trading: What you need to know
How to get started
Understanding and explaining Options, Warrants & Futures
Interest Rate Market
Exchange Traded Funds

Find out share prices, company information and up coming floats.

The above information is supplied by the Australian Stock Exchange.
The Financial Literacy Foundation: Understanding Money
The Financial Literacy Foundation has been established by the Australian Government to give all Australians the opportunity to better manage their money. The Foundation was launched on 6 June 2005.

The Understanding Money website offers a wide range of financial literacy information for people who want to find out more about managing their money. It has tools such as a budget planner, topics on money related issues and links to other useful websites.
 What is a syndicated loan?
A syndicated loan is a secured loan to a company which emanates from a banking or financial institution. Syndicated loans offer a floating rate of interest that is tied to a benchmark and is reset periodically (usually every three months).

In the US and Europe financial institutions remove loans from their balance sheets, primarily for capital adequacy reasons (unlike Australia where the banks often seek to maintain full relationships with their clients). This enables investors to participate in a syndicate of company loans. The loans are structured, arranged, and typically managed by one or more commercial or investment banks known as arrangers. The arranger raises investor dollars for a borrower in need of finance and is paid a fee by the borrower. As part of the loan syndicate, investors get full access to the company’s financial records. This can give investors more information regarding the investment target than is usually available to high yield bond investors, providing an extra degree of comfort.
What are hedge funds?
Defining hedge funds can be difficult as there are many types of hedge funds that differ significantly from one another in terms of their investment objective, style, performance and risk characteristics. Essentially hedge fund managers invest in similar asset classes to those of traditional managers, but incorporate different skill based strategies which may include the following:

Short selling a security in the expectation of it falling in value and buying it back for a lower price in the future

Use of leverage (or borrowing) to finance an investment

Use of derivatives such as options and futures, which may have similar effects to leverage

The use of these strategies allows alternative managers to add value where traditional managers cannot. This is because traditional managers are typically not permitted to use short selling or to leverage their portfolios. Using alternative strategies enables hedge funds to target positive absolute returns, irrespective of a particular benchmark.

Other distinguishing features of hedge funds can include
 
Incentive based remuneration whereby a performance fee is charged in addition to the management fee if the manager exceeds a certain level of outperformance
Fund managers invest a significant portion of their own wealth in the fund aligning their interests with that of investors
Limited liquidity that results in set time frames for investment or redemption of monies, eg. monthly or quarterly
What are hybrids?
Hybrids are securities that may have aspects of both equity and fixed interest investments, offering a fixed or floating return over a set time frame with the option of converting to shares at maturity. These hybrids allow investors the opportunity to participate in the appreciation of the underlying shares, with the protection of receiving regular income.

Consider an example where $10,000 is invested in a hybrid security which pays income semi annually at a fixed rate of 6%pa for three years. The investor would receive $300 every six months ($600pa) until maturity, at which time the investor could choose to convert their investment into shares, rollover their investment (ie. stay invested in the hybrid) or receive their $10,000 back in cash.
Agribusiness Industry fact sheets (Timbercorp)
THE POPULARITY OF ALMONDS
The almond is a versatile nut, able to be consumed raw or processed in a variety of ways. In developed countries, including Australia, it is considered an important part of a healthy diet and in developing countries it is valued as an attractive source of protein. In some countries it has cultural significance and is associated with ceremonies and celebrations.

THE POPULARITY OF AVOCADOS
Avocados are used predominantly as a fresh fruit. However avocados also have a wide variety of uses as a manufactured product, such as sushi and as the base ingredient for the much loved food product, guacamole. Avocado oil is also used in cosmetics and due to its high nutrient content has become a popular cooking oil and salad dressing. Avocados are No.1 in the “Top 10 Foods that are good for your heart” being sodium and cholesterol free. They have 60% more potassium than bananas and recent studies have shown that consumption of avocados increases your body’s ability to absorb heart-healthy and cancer fighting nutrients that are found in other vegetables.

THE PAPERLESS SOCIETY – AN URBAN MYTH
It was once thought that with the introduction of technologies such as the Internet and email, Australia would soon become a paperless society. This could not have been further from the truth. Studies have shown that the introduction of technology into a country dramatically increases the use of paper. Countries such as China and India which are experiencing strong growth in GDP, population, income and literacy levels, are seeing dramatic increases in paper consumption.

THE POPULARITY OF MANGOES
The mango is the second largest tropical fruit crop in the world, second only to bananas. This fruit, which is typically eaten fresh, can also be used for a variety of purposes that include canned fruit, juices, jellies, dehydrating and pulps that may be used in iced confectionery and yoghurts. Mangoes are even used in their un-ripened form for pickles and chutney.

THE POPULARITY OF OLIVE OIL
The demand for olive oil has grown significantly in recent years, aided by the popularity of Mediterranean-style cuisine, in which olive oil is an important ingredient, and an increasing awareness of the health benefits of olive oil. Olive oil is an important part of a healthy diet. It contains a variety of valuable anti-oxidants that protect against cancers and its consumption can help reduce the level of total blood cholesterol. Olive oil is also beneficial for the stomach, hepato-bilary system, pancreas and intestines. It has anti-ageing properties and helps with osteoporosis, cognitive function and skin damage. Although it is mainly used in cooking, it is also consumed as a dip and as a salad dressing. Olive oil is also used in the manufacture of cosmetics. Careful marketing over recent times have raised the awareness of the health benefits of olive oil and dispelled a few mis-conceptions. For instance, the term ‘extra-light’ olive oil does not refer to the fat content of the oil, merely the taste and colour.
Mirroring benchmarks…are we doomed to make these mistakes again?
Zurich Investments, the funds management business of Zurich Australia, has released a white paper on the pitfalls of fund managers mimicking global benchmarks and how thematic investing fits into an international share portfolio.
Strategy of the month: Payment of CGT Liabilities
Jim’s portfolio of managed funds has doubled from $175,000 to $350,000 since 2003 and he is concerned that “such gains cannot continue”.
 
  • Jim Smith
  • 45 years
  • Salary of $120,000 per annum, plus superannuation of 9%
  • Home value: $600,000
  • Mortgage of $50,000
  • Monthly repayments of $1,000 with the debt expected to be repaid in 7 years.
  • Superannuation of $300,000
  • Managed funds of $375,000

  • Because Jim’s portfolio of managed funds has doubled from $175,000 to $350,000 since 2003 and he is concerned that “such gains cannot continue” he has indicated to you that he wants to reduce his exposure to the Australian share market and wants to “take some of the profits made in the last 3 years" and is still “happy to leave some in for the next person”.

    Jim is best classified as an astute investor, cautious, but not conservative.

    Want to learn how Jim invested next?
    Budget tax changes: A strategic timing opportunity for agribusiness!
    The May budget this year has created strategic timing opportunities for Australian investors to make the most of significant tax changes that will be introduced on 01 July 2006.

    The most profound effect will be for tax payers in the $95,000 or more categories who currently pay some 47% tax (plus Medicare) on every dollar over the threshold. From 01 July an income earner will have to earn an additional 58% MORE income to be included in the top tax bracket, which in itself has been reduced to 45% and starts at the massive $150,001.

    The Australian Financial Review reported that just ‘the Top 2% of wage earners, those who earn over $150,000 a year, will pay the new top marginal rate of 45c in every dollar'.

    The implication for potential agribusiness growers is to optimise their investment positions prior to 30 June to make good use of the available tax deductions afforded to Growers in the various projects prior to 30 June as when the income is received in future years the Grower most likely will be in a lower tax bracket, simply due to legislative change!
    Top 10 Golden Rules Of Agribusiness
    The Australian Agribusiness Group (AAG) has released its “top 10 golden rules” of agribusiness to consider before making any investment decisions.