Financial planners share their best investment tips
Financial planners are experts at putting themselves in their clients' shoes to give advice about investments.
However, this week we've turned the tables, and asked advisers where they put their own money and what their favourite investments are.
FRASER KAHLER, Gamma Wealth Management investment adviser:
Well-known quality companies such as Woolworths that can pay fully franked dividends and also dividend reinvestment, which highlights the power of compound returns. A $10,000 investment in Woolworths in January 2000 is now worth more than $110,000.
JOHN McILROY, Crystal Wealth Partners executive director:
London property - residential apartment bought three years ago that has benefited from a rising property market and declining Aussie dollar. Rental returns are much higher than in Australia and borrowing costs about 3 per cent. Also Nestle shares, listed in Switzerland - they have increased 35 per cent during the past two years.
BRENTON MIEGEL, Goldsborough Financial Services senior planner:
My favourite investment is within my superannuation, which offers some taxation benefits that other investments don't have. My super portfolio is 100 per cent invested in Australian shares, some of which is geared. It is a very aggressive investment strategy that has meant significant growth in the portfolio in recent times. However, it also means that when the sharemarket sees declines the value can reduce rapidly. I'm comfortable with the 'risk' I'm taking with this strategy.
GREG COOK, Eureka Whittaker MacNaught chief executive:
I like an agreed value income protection insurance policy. I broke my back skiing in 2009. Three different ambulances, including an over-snow, took me from Charlotte Pass to Cooma. I was forced to spend a few months away from my business while I convalesced. Your future earning capacity is probably your largest asset. Protecting it is a foundation step of any financial plan, and a sound investment.
GLENN CALDER, Westpac senior financial planner:
Everything has a relative value, such as when term deposits were paying 8 per cent they were probably my favourite investment, whereas now at 3 per cent they have nil to negative returns after tax and inflation. Over the years shares have probably been my favourite, however, the best of them, such as the banks, are now starting to look expensive.
HELEN DUNDON, Prescott Securities principal and financial adviser:
A Magellan global managed fund, which gives me access to some of the world's leading companies including Microsoft, Novartis, Wells Fargo, eBay and Google. The fund has returned me just under 20 per cent a year for the past three years. My favourite purchase has been an electric car as I no longer need to stop at the petrol station on the way to work and have not compromised on style or performance. The car means I am saving between $35-$40 a week on petrol.
LAWRENCE ORLANDO, Bourke Shaw Financial Services principal:
Australian blue chip shares via a managed fund. For me it's a set-and-forget strategy. I buy and hold for the long term and use any available equity to make extra purchases. I like the concept of receiving income via dividend distributions and the effect of compounding interest. My philosophy is simple. I invest money to make money and any time is a good time to make money.
GLENN FAIRBAIRN, Hewison Private Wealth director:
Australian Foundation is a company listed on the ASX that provides a diverse exposure to the Australian sharemarket. They have been in operation for over 80 years and have an excellent long-term record of providing share price growth and fully franked dividends.
CATHERINE ROBSON, Affinity Private financial planner:
The US equity market via a low-cost exchange traded fund. The fund we have been using is Vanguard US Total Market Shares Index ETF. The great thing about investing in US companies is that there are many industries not well represented in Australia.
RANDALL STOUT, HPH Financial Planning:
I always like Australian share small cap managed funds. The academic research has shown that small cap stocks perform better than large cap stocks in the US and Australia. For my kids' education savings plan I used a small cap managed fund. It can be volatile too but I have stayed invested through many market conditions.
TIM WEDD, executive director of Crystal Wealth Partners :
A concentrated portfolio of leading global companies, unhedged to the Aussie dollar. This includes GlaxoSmithKline, Diageo and Reckitt Benckiser Group. There's international equity diversification of about 15-20 per cent.
JOE STEPHAN, Stephan Strategic financial planner:
Forgive me for being ultra-boring but I like investments that have seen the term of several prime-ministerships, where future returns are not predicated on stories and where leakages such as tax and costs are minimised.
As an investor who operates on at least a 10-year time frame for investment, an index fund is an absolute winner for me.
SCOTT QUINLAN, Financial Wisdom senior adviser:
Australian shares. Not only can these shares grow in value over the long term but they can be a good source of income via dividends. These dividends often come with franking credits that help to reduce your tax each year. I also find shares to be very flexible - for example if I need to access extra money, I can sell down part of an Australian share portfolio within a few days.
TONY RIGBY, AMP financial planner:
I like investing through superannuation because I can choose from a range of options. I like to diversify within my super with a mix of shares, property and fixed interest. Superannuation is taxed concessionally at 15 per cent and I'm looking forward to a tax-free income stream down the track. What other investment can match that?
LEE VIRGIN, Hillross Financial Planner
My favourite investment in recent times has been several well-diversified managed funds. These have given me exposure to a whole range of investments without the need for me to spend valuable time working out what companies or shares to invest in.
REX WHITFORD, Wealth For Life Financial Planning principal:
I do for myself what I recommend for others when appropriate: The Vanguard High Yield Australian Share fund. It can be purchased as a retail or wholesale fund or as an exchange traded fund, and is fantastic for retirees and wealth accumulators alike.