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9 Investment Alternatives in Australia You Can Consider

June 28, 2022 | Investment

Investing is more than just super and real estate. Today, we examine some of the many investment alternatives that are accessible in Australia that you might want to consider while putting together a portfolio.

While property appears to garner the most attention when it comes to investing money in Australia, a 2020 research study by the Australian Securities Exchange (ASX) indicated that 46% of Australians hold investments outside of their home or super, with shares and other investments listed on an exchange being the most popular investment choices.1

What Types of Investment Alternatives are Available?

If you’re curious about your investment alternatives outside of property and super, here’s a list of some of Australia’s most prevalent investment options to consider when developing your own investment portfolio.

1. High-Yield Savings Accounts

If you’re looking for a safe place to stash your cash, high-yield savings accounts might be the right investment option for you. These accounts offer higher interest rates than what you’d find in a standard savings account, so your money can grow faster. However, with interest rates still remaining relatively low, there is still the possibility that the real value of your money may decrease due to inflation.

2. Forex

Forex trading is the buying and selling of currencies to try and make a profit. The foreign exchange market is open 24 hours a day, five days a week, giving investors the ability to trade whenever convenient for them. Forex trading requires a vast amount of knowledge, research and monitoring so it is best to seek out the advice and guidance of a professional forex trader.

3. Money Market Funds

A money market fund is a type of unlisted managed investment scheme.2 Money market mutual funds invest in short-term debt instruments, such as government bonds, certificates of deposit, and commercial paper. These investments are typically very safe and offer modest returns.

4. Investment Bonds

An investment bond is a type of debt security that pays periodic interest payments and matures at a predetermined date. Investment bonds can be issued by corporations or governments and are typically very safe investments. Bonds are a ‘tax paid’ investment, meaning that tax on investment earnings is paid at the applicable company rate of 30% by the bond issuer – not by the investor. Investors receive ‘tax paid’ returns provided they meet certain conditions – most notably that the investment is held for at least ten years and contributions do not exceed the 125% rule.3

5. Exchange Traded Funds

An exchange-traded fund (ETF) is a type of investment fund that tracks a basket of assets, such as stocks, bonds, or commodities. ETFs are traded on stock exchanges and can offer investors exposure to a wide variety of asset classes which can help an investor to diversify with low starting capital and at a lower cost. The 2020 ASX study found that ETFs are most popular with young investors aged 18-24.4

6. Dividend Stocks

A dividend stock is a type of share where the company pays regular cash dividends to shareholders. These payments can provide investors with a source of income and the potential for capital gains if the share price increases. These companies usually are well established, with stable earnings and a history of distributing earnings back to shareholders.

7. Individual Stocks

An individual stock is a single share of ownership in a publicly-traded company. Investors who purchase individual stocks assume the risk of loss if the share price decreases, but they also have the potential to earn high returns if the share price goes up. Directly held Australian shares are the most popular investment for Australians across all age ranges.5

8. Alternative Investments and Cryptocurrencies

Alternative investments include assets such as hedge funds, private equity, and commodities. These investments can be more volatile than traditional investments, but they also offer the potential for higher returns.

Bitcoin is a type of digital currency known as a cryptocurrency. It operates on a decentralised peer-to-peer networked program on your computer, meaning that transactions can be conducted between a buyer and seller without the need for any third-party oversight such as a regulator or bank. The underlying technology that makes all cryptocurrencies possible is the blockchain.  Bitcoin, Ethereum, and Litecoin are some of the more well-known cryptocurrencies.

9. P2P Lending

P2P lending is a type of lending where individuals borrow and lend money to each other without going through a traditional financial institution. This form of lending can offer higher interest rates than traditional loans, but it also carries more risk should the lender default.

Ready to build an Investment Portfolio?

So, there you have it! A list of nine different investment options that you can consider when building your portfolio. Talk to an experienced financial adviser to learn more about which investment choices might be right for you, your objectives and your personal circumstances.

With our extensive specialist knowledge, a Coastal Advice Group Financial Adviser can help you with all your Investment Planning needs. We help our clients make logical decisions about their investments, and our professional financial advisers will guide you through the process. We are based in Sydney, the Central Coast, Newcastle, Port Macquarie and Byron Bay. Contact us today to learn more!

 

REFERENCES:

  1. https://www2.asx.com.au/blog/australian-investor-study
  2. https://www.canstar.com.au/managed-funds/
  3. https://www.ioof.com.au/investments/understanding-investing/investing-in-investment-bonds
  4. https://www2.asx.com.au/blog/australian-investor-study
  5. https://www2.asx.com.au/blog/australian-investor-study

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.

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