Superannuation / Personal Investment 

Superannuation Contributions

  • Contributions can be made to your super either Concessionally or Non-Concessionally
    • Concessional contributions (Such as employer superannuation guarantee or salary sacrifice contribuitions) are made from pre-tax income and are taxed at 15% when deposited into the fund.
    • Non-concessional contributions are made from your post tax income. No further tax is deducted when depositing these funds into your superannuation account.
    • Concessional contributions form part of your taxable component and
    • Non-concessional contributions part of your Tax Free component.
  • Your superannuation earnings are also taxed concessionally at 15%.
  • This is rather than the alternative which is your Marginal Tax Rate (MTR).
    • Marginal tax rates can be found on the Australian Tax Office (ATO) website.
  • You cannot access this money until you meet a condition of release or retirement age.

Personal Investment 

  • Investor Directed Portfolio Service (IDPS).
  • Are investments made outside of the super environment.
  • You may pay your marginal tax rate on any earnings or capital gain.
  • You can access these funds at any time.
  • Established to help you reach your goals in your specified time frame. For example,
    • a new car next year,
    • world cruise or holiday in 3 years,
    • children’s education in 8
    • or early retirement at 54.

Common to Both Super and Personal Investment

  • Investment Platforms
    • Administrative system for investments offering varying levels of service and investment fund options.
  • Share Market
    • A secondary market where share holders transfer holdings in companies between interested parties.
  • Shares (also commonly known as equities)
    • Are a unit of ownership in listed companies.
      • Companies can be owned and operated as a
        • Sole proprietor
        • Partnership
        • Private corporation
      • An Index
        • A statistical measure of value represented by a portfolio of underlying investments. I.e. the Dow Jones index, ASX all ordinaries index, S&P 500… etc.
  • Mutual / Managed Fund
      • A financial product that invests money on behalf of its members. It utilises its increased group buying power and size to access a diversified portfolio of investments.
    • Types of Managed Fund
      • Index Fund (Train following its tracks)
        • Low cost
        • Mirrors the movement in the index it tracks
        • Gives exposure to the portfolio that the index follows
        • Passive investment
      • Managed Fund (Cab Driver)
        • Invests according to the list of rules or mandate, defined in its product disclosure documents. i.e, Small Cap, European large cap, long-short funds, geared funds, income funds, bond funds
        • Investments are made by a team of professionals utilising research conducted buy in house analysts.
        • An Analyst may assess the merits of an investment and creditworthiness by;
          • Reviewing company reports and financials,
          • Contacting directors or management directly with enquiries,
          • Visiting / touring company facilities and assets,
          • Assessing competitors and market conditions,
        • Relative higher cost
        • Wide range of niche mandates and objectives
      • Multi Manager
        • A fund that holds interests in range other underlying funds. They generally do not hold companies directly, but can pick fund managers (Fund of Funds) or allocate a percentage of their holdings to an in house manager to invest to their strengths (Manager or Mangers).
  • Risk Reward
    • Refers to the trade-off between the potential return (capital growth and income) and the probability of reaching those returns. (Investment ladder)
  • Business Cycle
    • The average time between repeated market phases. Decline, trough, appreciation and peak.

Market Terms

  • Diversification
    • Holding investments across a wide range of asset classes. Property, shares, term deposits, bonds, cash, commodities etc – all have a different level of a risk and reward. 
  • Liquidity
    • Refers to the ability at which you can turn your asset to cash. In the extreme examples think of the time it takes to sell a house (illiquid) in contrast to getting your money out of your bank account (liquid).