07.Putting it all together
Do your homework
Get as much information as possible about any fund you’re interested in, including its current product disclosure statement. This will tell you the types of investments the fund manager can buy and whether it’s designed to produce income or growth or a combination of both. Use our checklist for what to look for.
- Data from rating agencies such as ASSIRT (Standards & Poor's), Morningstar, van Eyk or InvestorWeb can also be useful in your research. However, their opinions may differ as they all use a different methodology for their ratings.
Diversify: after you’ve satisfied yourself that the funds you’ve picked are right for you, choose at least a couple, rather than giving all your money to one manager. By diversifying you’ll reduce your risk.
Drip-feed your fund: another smart step is to ‘drip-feed’ money into managed funds by using a regular savings plan, smoothing out volatility by buying in at various prices. This is a great way to make your wealth grow without too much pain.
Don’t chop and change: once you’ve made your choice, stick to it — chopping and changing could cost you money. Fund managers use many different techniques, and depending on market conditions, sometimes one style works better than another. Keep in mind that managed funds are a long-term investment, so you should expect short-term fluctuations and don’t need to be panicked by them. If you’re seriously concerned about the performance of one of your investments, consider getting financial advice before you take action.
Some online discount brokers have fund profiles and other information on their websites.
Financial advisers/planners have access to managed funds research and should be able to answer your questions.
The Financial Planners Association (FPA) can give you a list of planners in your area. Contact it on 1800 626 393, or visit the website: www.fpa.asn.au.
Before investing in a managed fund, check that the ‘responsible entity’ is licensed and the scheme is registered with the Australian Securities & Investments Commission (ASIC). Contact ASIC on 1300 300 630 or www.fido.asic.gov.au.
The National Information Centre on Retirement Investments Inc (NICRI) provides free information about financial planning and specific investment products. Call 1800 020 110 or (02) 6281 5744. Nicri’s moneymap website at moneymap.nicri.org.au has a number of calculators to work out loan, investment and savings scenarios.