Ask an Adviser

Category » Investing

There were 12 articles found in this category:

• Q1 What is a risk profile?

  A risk profile, also known as an investor profile, is when investors are categorised based on their willingness to take risks in order to achieve higher returns. This information is then used to select the appropriate investments to match their risk profile. Read more

• Q2 What is a managed fund?

  A managed fund (also referred to as an investment fund) pools your money with that of other investors. By doing so it enables you to take advantage of investment opportunities you might not otherwise be able to access as an individual investor. The money is managed by professional investment man ... Read more

• Q3 I’m planning to sell some of my shares – how do I work out how much Capital Gains Tax to pay?

  Capital Gains Tax is not a separate tax. The net capital gain on selling your shares gets added to your taxable income and tax is then calculated via your income tax return. The following steps will help you determine how to calculate your capital gain: Determine your capital proceeds i.e. the ... Read more

• Q4 What is diversification?

  Diversification refers the ability to help reduce risk by spreading your investments across a range of different investments within the same asset class and across different asset classes Diversifying across different investments simply refers to purchasing multiple investments within the same ... Read more

• Q5 What is a loan-to-value (LVR) ratio?

  A loan-to-value ratio (LVR) is an expression that compares the value of a portfolio with the level of debt that is associated with the portfolio. The LVR is measured by dividing the value of the debt by the value of the asset. For instance, if you have a $120,000 investment portfolio, and your ... Read more

• Q6 What are the different asset classes?

  There are 5 commonly available asset classes available to investors, including: cash, fixed interest, property, international shares and Australian shares. These are explained below: Cash – investments in cash are more than just money retained in your bank account. They can include inves ... Read more

• Q7 What’s the difference between growth assets and income assets?

  Growth assets are those assets which focus on delivering capital growth (such as shares and property), whereas income assets have a focus on delivering income (such as cash and fixed interest). Because growth assets bring with them the potential for higher returns, they are often more volatile ... Read more

• Q8 What is a margin call?

  A margin call can occur if you have borrowed and invested using a margin loan or similar loan instrument. A margin call is a situation that arises when the loan-to-value ratio (LVR) of a portfolio rises above a limit pre-approved by the lender (ie. the value of equity in the portfolio falls bel ... Read more

• Q9 What is the difference between good debt and bad debt?

  Good debt is debt for which you are able to claim a tax deduction for interest costs as the funds are being used to generate assessable income, such as an investment loan or an investment property loan. Conversely, bad debt is debt for which no tax deduction can be claimed for interest costs, an ... Read more

• Q10 What is debt recycling?

  Debt recycling is the process of turning bad debt (otherwise known as non-deductible debt) into good debt (known as deductible debt). This process generally involves borrowing funds for investment purposes and using the income from those investments, and any surplus income, to pay down the bad ... Read more

• Q11 How do I work out my risk profile?

  Your investment risk profile will depend on your personal circumstances and will need to encompass the following: Your financial objectives Your investment time frame Your appetite for risk Most industry superannuation funds offer education seminars and provide a range of information and calc ... Read more

• Q12 How can I sell my shares?

  There are number of ways to sell your shares depending on your personal circumstances. You could utilise the services of a full service stock broker who can provide advice on what shares to sell and/or buy. Alternatively, if you just wanted to sell your shares without receiving advice, you coul ... Read more