Lime Super offers a range of different ways of investing in each asset class. Different vehicles will be suitable for different investors. For example, if you want to invest in Australian Shares, below are a few ways you could go about it. As you will see, there are many options and a good investor will consider all them.
With a direct investment, your fund owns the shares directly. With Lime Super’s help, you decide when to buy say BHP shares and how many to buy. In this manner you have complete control of your investments and you don’t have to pay management fees to fund managers, which is why it is our preferred method of investing. Every dollar of investment fees you save is a dollar more for you to spend in retirement. Why help the fund managers get rich when you can grow your own wealth? Of course this method of investing requires time and knowledge. Lime Super can assist if this is your chosen path.
A managed fund pools money from thousands of investors and hires professional fund managers to select which shares to buy and sell. Every managed fund tries to beat the average (the “index” eg the All Ordinaries Index) however by definition only about half of them can in any given period. Once fees are deducted only a small percentage of fund managers beat the index over the long term – it requires significant skill to do so, and also to identify managers that have the ability to do so. There is no guarantee that a fund manager that has beaten the index in the past will be able to in the future. Lime Super has identified a small number of fund managers that are likely to outperform the index over the long term.
Exchange traded funds
An Exchange Traded Fund (ETF) is like a managed fund however it typically follows the index rather than trying to beat it. In doing so it saves money on investment research and passes that money onto investors. ETF’s provide a cost effective way of achieving index performance. What’s more, ETF”s don’t tend to buy and sell their shares a lot, meaning the investor defers capital gains tax. This is particularly valuable to members of SMSF’s in the accumulation phase (ie pre-retirement in most cases). You need to be careful about selecting ETF’s – some of them invest in derivatives which can make the ETF inherently risky. Lime Super can help you identify which ETF’s to steer clear of and which ones are safer.
Listed Investment Companies (LIC’s) are investment vehicles that are themselves listed on the stock exchange. One result of this is that they can trade at more or less than their underlying value. For example, a LIC might own shares with a market value of $1 billion. Suppose the LIC itself has 100 million shares on issue. In theory its shares should trade at $10 each. At times its shares might trade at $11 and at other times at $9. A good investor will buy the LIC shares at $9 and wait till the gap between trading price ($9) and underlying value ($10) closes. Identifying LIC’s with good management that are undervalued can create significant investment value. Lime Super can help you identify these opportunities.
Listed investment companies
So which one is right for you? That depends on a number of factors. Why not make an appointment and we can help you invest more wisely. The first appointment is on us!
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