Hi Guys,
I was thinking of investing 50K into these http://wealthdefenderequities.com.au/Home/
What do you think?
Opinions needed on investing in Wealth Defender Equities Limited
Bargaphile on 30/03/2015 - 09:21
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Agreed. Prospectus doesn't reveal much. Many better investments out there without the uncertainty imo
mskeggs, your investment advice here is always top notch. If you started an investment report/service (ala Rivkin but without the insider trading nuiances) I would definitely pay for it.
Keep up the invaluable posts!
I agree, his posts are bloody good and enlightening. If he looks anything like his display picture, he should surely be the Australian santa claus of advice giving.
Thanks for the excellent insight. I basically have 200k in ubank and want an investment that will give a better return over the long term. Something I don't have to worry too much about would be a bonus
You and everyone else ;-)
Up to $200k per AU bank is guaranteed by the government, so you cannot lose your money, even if the bank goes broke in a GFC style scenario (as the gov can always print $$$ to pay you back, what they will be worth, who knows).
Since it is a positive return after inflation, it is probably the best low risk investment currently.However, this low return is unlikely to meet anybody's needs in terms of return on their capital to save for things like retirement etc.
As a result, people everywhere are looking for investments that offer more growth. This makes them go up in price. For example, real estate, share markets etc.It might be a good time to take advantage of the thing private investors have over funds managers/pro investors - you can do nothing. You don't have to chase high returns if the risk is up.
Sorry I can't suggest a better alternative, but there really are no low or medium risk investments offering better than the 3.5% a high yield saver account is offering. There are higher risk/return investments, but these are giving very poor value. By which I mean, you used to be able to get 25% p.a. interest loaning money to a high risk government or corporate bond issuer, but even economies I think will almost certainly default in the next decade (e.g. Mexico) are only paying c. 7%.
To make a bargain analogy, it is as if everyone put their prices up before an ebay 20% off coupon. People are looking everywhere for deals, but there just aren't many good value offerings.
Essentially right now for any return more than 3.5% (or 4% with ING + Orange account - only up to $100,000 invested)you have to take some sort of risk which means you will have to "worry".
You can take more risk and invest directly in shares or a little less risk investing in hedged LICs (but you have to pay them a fee for their work regardless if they made you money or lost you money. If they made you money they also take a percentage of the gain.I understand that, just wondering what kind of instrument I should be focusing on. I have money in ETFs and directly in shares
Assuming a straight index tracking ETF, then you already have a fair degree of risk. The rule of thumb is you will go backward 1 year out of 5.
If you are comfortable with that, because you are investing long term, then you might want to consider diversity - investing in assets that are uncorrelated with shares. In Australia this has traditionally been residential real estate. It is hard to believe that market has a lot of up side, however. The idea being if the stock market has a bad year then you have substantial investments in other areas.
The other traditional option is bonds, which usually move the opposite to shares. However, in the post-GFC, quantative easing world that relationship has broken down too, and bonds offer poor value and a potential for substantial capital loss, with only modest possible gains.I'm really at a loss to suggest any investment that offers a better return than a high interest saver without substantially higher risks.
I suppose you could take a leaf out of Warren Buffett's book and buy where fear is highest (currently iron ore, oil and other commodity producers) but any investment there is likely to take several years to bear fruit.
Listed investment companies have a pretty mixed track record.
When markets are high, they tend to trade at a premium to their holdings, when they are low, they tend to trade at a discount.
I note some are trading at a premium just now.
Whether this one is any good depends on what they invest. I skimmed the prospectus, and it doesn't give many hints.
If you are in some way a big fan of the manager or have some other reason to invest, it's a maybe.
I note they aren't leveraged and don't short sell, but are hedged against loss (which actually means they are both leveraged and short-sellers but not directly!). Note they do not say what level of hedging they will aim for, so there is no guarantee they would not make capital losses. And, of course, hedging substantially reduces the magnitude of any gains.
The bottom line is you are trusting some guys who have past successes to invest your money in stocks.
You will have to pay them to do so, between 0.8% and 0.98% of the value of your investment each year, plus 15% of any gain, all before tax.
This pay structure is like a hedge fund, as is the minimum $50k commitment.
If you feel investing in what is effectively a hedge fund is a good idea, go for it. I suggest it is a risky investment with high fees. I can't see what benefit this investment vehicle brings beside the expertise of the stock-picking, which is available at a lot of other places.
Perhaps a way to decide is to consider what you would hope to get out of this investment, and how you would feel if it made a loss?