Did you know that Australia is the world’s 14th largest economy?
Not only does it boast a robust economy, but it also shows economic stability and resilience when it comes to global economic downturns.
From the recession of 2008 to the current COVID-19 economic complications, Australia enjoys high consumer and business confidence, which is invaluable in rebounding their economy to pre-recession levels painlessly and rather quickly.
Therefore, if you’ve been thinking about investing in Australia, you’re already making the right choices.
Keep on reading for our full breakdown of the benefits of investing in Australia. We’ll explore the different investment assets that you should check out.
Investing in Australia 101: What Are the Benefits?
We’ve —lightly— touched upon the Australian economy and its resilience. But, let’s take a deep dive into what that means for you as an investor.
Australia is known for having a healthy competitive business and investment environment. This environment is supported by a foundation of stable politics. It also has rock-solid frameworks and a steady pace of business growth and acceleration.
Moreover, the country has an extensive network of strong banks with healthy fiscal balance sheets. In addition, it has strong legal frameworks. These frameworks protect its financial system from unethical behavior.
Besides, when you invest in Australia, you don’t have to worry about archaic laws that can slow down the pace of your investments.
In essence, Australia was able to strike the right balance between concrete financial laws and flexible regulations.
Australian Investment Assets: The Main Investment Options
There’s a wide spectrum of investment opportunities for every investor under the sun.
Whether you’re more comfortable with real estate and mortgage-based investments, or you’re interested in stocks (also known as shares), there’s something here for you to add to your investment portfolio.
Mortgage and Real Estate Investment Trusts (REITs)
They have years of expertise that can cut through the white noise and help you select the right properties for your portfolio.
Moreover, you can choose to invest in a real estate investment trust (REIT). It’s a specific type of property fund that’s listed on the public market. An example of a REIT would be the Australian Stock Exchange (ASX), in which investors can directly purchase units.
This type of trust works by pooling money in a fund and investing it in a variety of property assets, similar to a managed fund. These assets span commercial, industrial, and even retail properties.
What’s great about REITs is the exposure that it provides to the property market with the perk of automatic diversification. It decreases the risk, as well as proving a cost-effective way to invest instead of buying a single property.
A managed fund, or otherwise known as a managed portfolio, is an investment option where your money is pooled with other investors creating a fund. Then, this fund is ‘managed’ by a fund manager.
Also, there are multiple types of managed funds that are split according to the asset class. For instance, an Australian shares managed fund will be composed of nothing but shares from Australian firms.
Another example would be picking a managed fund that’s diversified with a cocktail of shares, property, and even cash. As we’ve discussed earlier regarding REITs, managed funds have the same benefit of hardcoded diversification.
However, do keep in mind that managed funds’ earnings are split up and divided among all the investors according to the number of units they bought.
Basically, the amount of money you invest in a fund will be equated to a concrete number of units.
This way no one investor would get more than their fair share when it comes to earnings. For instance, if you’ve bought 2 units, while another investor bought one, then your earnings will be double what the other investor gets.
If you’re more risk-averse and would rather keep to cash-based investments, there are many options for you to consider.
Cash investments, like savings accounts or term deposits, are rather low on risk. However, that also means that your returns will be on a lower scale. Especially, when compared to the other investment instruments we’ve discussed.
Yet, it’s a great option if you’re looking for an investment option that’s as stable as an elephant. It also provides low-risk income coming in on a regular basis in the form of internet payments.
Shares (Also Known as Equities or Stocks)
Whatever term you’d like to call use, investing in shares is one of the most common investment mechanisms on the market.
Basically, when you buy a share, you’re making a piece of that company your own, thus making you a shareholder in the company.
There are advantages and disadvantages to buying shares. If the company you chose to buy its shares increase in value, then the value of your investment will mirror that increase.
Yet, the opposite is also true. Therefore, if the share price falls, then the value of your investment will also fall.
Exchange-Traded Funds (ETFs)
If you’re more of an index fund fan, look no further than exchange-traded funds (ETFs).
In the simplest of terms, an ETF is a form of a managed fund that can be traded on an exchange, like the ASX, and it tracks a specific market index. This type of investment ties your earnings to the index the fund is tracking and nothing more.
Unlocking Global Investments
It might seem a bit like taking a plunge into the unknown when you’re investing in a foreign market. However, investing in Australia has never been easier than it is right now.
After reading our guide, you can start a well-educated research spree into the opportunities that await you.
However, the learning never stops, so make sure to check out all the resources available to you. Our opportunities and real estate investment pages are filled with all the information that you could possibly need to begin your investment research.