With a recession looming on the horizon, wealth management advisors say that now is the best time to keep your money safe in sustainable investment vehicles that will preserve your money’s value. Here are four investment choices available in Australia if you want to diversify your investments beyond just real estate and a retirement fund.
1. Investment Bonds
An investment or growth bond is a fixed-income security issued by an insurance company and backed by the company’s assets. These bonds are typically offered in terms of five years or more and pay out a fixed rate of interest. Insurance companies can pay the interest payments at regular intervals or at the end of the term.
When you invest in an investment or growth bond, you pool your money with money from other investors, and an investment manager manages the funds. As investments go, investment bonds are the easiest ways to do income protection by allowing you to take a hands-off approach to investing.
The fixed rate of return can provide an additional source of income, and the funds are generally considered low-risk investments. Additionally, the funds are usually tax-deferred, meaning that you don’t have to pay taxes on the interest payments until the end of the term.
2. Treasury Bonds
Treasury bonds are a great investment option for those looking for a safe, low-risk option during a recession. They are issued by the government, which makes them a reliable and secure investment. Treasury bonds are also known for their fixed rate of return, meaning that investors can trust that their investment will not be subject to sudden market fluctuations.
Financial advisors consider treasury bonds the safest government bond because the US government has never defaulted on its debt. This means that investors can trust that they will receive their promised rate of return and their capital will not be at risk.
3. Exchange-Traded Funds (ETFs)
Exchange-traded funds, or ETFs, have become increasingly popular over the past few years as investors look for new ways to diversify their portfolios and gain exposure to different asset classes.
ETFs allow you to track a basket of assets, such as stocks, bonds, or a combination of both. This means that when you invest in an ETF, you invest in a basket of different assets rather than a single stock. This can be an effective way to diversify your portfolio and take advantage of market movements without the risk of investing in a single stock.
4. Cash Investments
While keeping a significant chunk of your wealth in investment vehicles during an economic downturn is good, you still need to be liquid. Wealth managers often say that cash is king during a recession because of the flexibility it gives you during a crisis.
If you don’t want to take on too many risks, cash investments like savings accounts and term deposits might be a good option. These investments generally have lower returns than other products, but you can expect your money to grow steadily over time with a regular interest payment. This may be beneficial if you are looking for security and don’t want to hold your money for an extended period.
Conclusion
Investments are a crucial part of wealth management, especially during times of economic downturn. Any of the four options will be a great addition to your portfolio. However, they all have different risks and rewards, so it’s essential to research to ensure you make the best choice for your financial goals.
We believe wealth is best measured in the quality of life. New Wave Financial’s wealth advisors provide the best financial advice on the Gold Coast. Get in touch with us today to learn more.
