Nuts and Bolts
Interested in investing in Managed Funds? Read on…
1) Learn about managed funds
Vanguard’s Plain Talk Library has lots of easy-to-understand, general information about managed funds.
2) Put together a plan
Work out what your goals are and what you hope to achieve with the fund. Save up for your initial investment (you can buy into a fund for as little as $1,000, sometimes even less) and decide if you can afford (or want) to make regular deposits into the fund – if you do, your money will really add up over time. Check out a compound interest graph if you need proof!
3) Find a managed fund
Work out what type of fund suits you best – do you want Australian shares only, a mixture of Australian and International shares in a growth fund or do you want to invest in a responsible investment fund, for example?
Have a look at a variety of fund’s ratings and results over time and narrow down your choices to about two or three funds.
Request PDSs through one of the online brokers – for example, CommSec, InvestSMART or YourShare (to name a few) – and have a read taking into account fees, tax implications and the regular investment plan options.
4) Invest in a managed fund
You can buy into a fund through a financial adviser (who may be paid a commission), through a financial institution or by yourself. If you want to do it yourself just fill out the form in the PDS (that you request from the company running the fund) and send it in with your deposit.
Note that you can sometimes avoid entry fees by requesting the PDS via some online sites.
5) Monitor your managed fund’s performance
Keep an eye on the fund from time to time to see how it’s performing (but not too often – you might go mad!). You can monitor fund performance by comparing results to similar funds, against its own goals and industry benchmarks or indexes.
Have a look around this section of the Australian Securities and Investments Commission consumer website Moneysmart – it has some really useful information including tips for investing in managed funds, including information about what you can realistically expect from each type of asset fund.
Find a financial adviser
Check out the Australian Securities and Investments Commission’s website MoneySmart – it has loads of great information about obtaining personal financial advice and finding a qualified financial adviser. Experts often suggest you find an adviser who charges by the hour instead of receiving a commission.
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