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So where can you invest in the next 13 months and get a min 6% return?

SMSFs are looking for Yield  – and they are not getting it with bank deposit returns – sub 2% .

Returns in The ASX baskets of shares has done really well in the year to 30 June 2019 .

Investors expect a 6.1 per cent total return from Australian shares over 12 months, but will struggle to meet it (but not by much) according to my friend Recep Parker of Investment Trends . (Ps He is seriously smart)

It is expected that a diversified portfolio of quality Australian shares can yield 6 per cent this year after franking, with The Plato Australian Shares Income Fund targeting a 9 per cent gross return, including franking.

But beware – This is no time for complacency. 

According to Morningstar, after strong gains this year, Australian shares are 20 per cent overvalued (on a market-weighted basis for the S&P/ASX 200 index),

Living off capital and not doing the risk thing taking riskier bets on yield may be a stellar strategy this year – 

says Peter Bolton, a former investment adviser and editor of yeildreport.com.au, which tracks yield across asset classes.

So where do you invest your savings  that is in your super, mattress or Banks to give you an adequate yield?

These are some ideas ? of where you can get 6% yields in an article by Tony Featherstone in the AFR today https://www.afr.com/personal-finance/budgeting/how-to-get-a-6pc-yield-without-losing-your-shirt-20190717-p5281i

Unlisted Australian Government Bond Funds

The Mercer Australian Sovereign Wealth Bond has starred with a total return of 11.5 per cent over 12 months. The Jamieson Coote Active Bond fund had a 10.4 per cent in that period and the Vanguard Australian Government Bond Index Fund returned 9.98 per cent.

These are outstanding returns given the risk profile of government bonds but are unlikely to be repeated in the next 12 months without a slew of further domestic rate cuts.

Listed Australian Government Bonds 

The Russell Australian Government Bond ETF returned 12.01 per cent over 12 months to June 2019, ASX data shows. The iShares Treasury ETF returned 10.59 per cent and the SPDR S&P/ASX Australian Government Bond Fund 10.52 per cent.

Corporate fixed-interest funds

They are investment in bonds – debt issued by corporates 

This form of corporate debt has a greater risk of default but typically has higher returns.

In investment-grade bonds, the Vanguard Australian Corporate Fixed Interest Fund has a gross return of 8.08 per cent over one year to June 2019. It invests in bonds issued by Australia’s major banks, offshore banks, property trusts and other lending institutions.

Neuberger Berman’s NB Global Corporate Income Trust is part of a new breed of listed funds in Australia that offer exposure to global high-yield corporate bonds – a $US2.7 trillion market.

Listed on the ASX in 2018, the trust holds a portfolio of sub-investment-grade bonds from up to 350 companies, including Netflix, Dell, Hertz and Virgin Media. The goal: a 5.25 per cent annual return (after fees) paid monthly, with low volatility.

Smart beta equity ETFs 

The iShares S&P/ASX Dividend Opportunities ETF had a trailing yield of 7.14 per cent at the end of June 2019, ASX data show. It provides exposure to a basket of 50 high-yielding stocks.

The UBS IQ Morningstar Australian Dividend Yield ETF aims to replicate the price and yield performance of Morningstar’s model income portfolio, consisting of 25 stocks. Its trailing yield is about 4.9 per cent and one-year total return (including capital growth) is 11.6 per cent.

One of the first yield-focused ETFs, the Russell High Dividend Australian Shares ETF, had a trailing yield of 8.5 per cent in June 2019 and total return of 11.7 per cent. 

And then their are hybrid funds 

This is where the funds find the acquisition of the LiC with debt and equity 

I’ve invested in GEAR that invests in the top 50 – leverages it by 30-50pc – dividends pay interest and growth gives a return .

Peer-to-peer (P2P) funds

Enables your money to invest in an individual loan or pool of loans, potentially earning a higher return compared to fixed interest, albeit with higher risk.

They promote net returns about 6.5 per cent over 12 to 15 months.

Investors in property-based P2P funds must be comfortable with potential default risks if borrowers cannot repay their loan and property prices falls.

Investors who believe property values are stabilising and the risk of loan defaults is easing because of rate cuts, might find extra appeal in P2P platforms in mortgage securities. 

They suit experienced, risk-tolerant investors who understand the risks of property lending.

Lending to Business  or others that you know 

There is a business called Credi – the people’s bank – that enables you to be the bank to people that you or your trusted adviser knows – with all the relevant securities in place.

Another business – Thincats – invest in small business – and promote 10-15% returns – where they do the analysis and risk profile – and “crowd source the lending.

Investing in Business and Venture Capital 

This can give exponential returns – but is not for the faint hearted . It might be worth putting a small percentage of your portfolio into high risk stocks or shares – on the chance that maybe it can become a google, Apple, Microsoft, 10cent, canva , amazon or atlassian  .

You will also be playing a part in the Innovation Space!

Global Stocks 

Look to invest in global stocks – China, Asia, USA and Europe 

And then there is Direct  Property – Commercial and Residential 

Residential Property has taken a hammering this year – however long term – with the ability to borrow money at low interest rates – it’s enabled many Australians to build wealth over the years. 

Based on the stability and attractiveness of the Australian lifestyle – it looks like demand for property in Australia is likely to rise – however there are risks that you need to look out for and strategies to follow to maximise the likelihood for growth.

With negative gearing available – it is a stellar way to build your assets and wealth with the help of your taxes 

Commercial property – will give higher returns – because there are higher risks 

How to invest 

These investments are all readily accessible via Wraps and online. 

If you want to know how to invest your savings and super – and minimise your risk – based on your risk profile – speak to your financial planner – https://ift.tt/1soRJEB


Posted on July 20, 2019

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