I’m new at this, hope somebody can help. I’m looking at investing in managed funds (Navigator)and am wondering if others have found mf’s more worthwhile than shares. Also my partner is in the higher tax bracket, should we put the investment in his name? If we put it in both names do we have to split the tax benefits 50/50?
Personally I wouldn’t invest in managed funds. They’re diversified to the max so growth is as low as possible, you don’t get a huge return on your investment at the end of the day, you have no control over how your money is invested and you’re still not 100% safe.
If you can invest in property then do. If you’re not going to invest in property or anything else though, you may be better off having your money in a managed fund instead of having it sitting in a bank account where interest doesn’t even cover inflation.
Until recently, unless you knew which specific shares to invest in, a managed fund was the only option for the average investor. With the introduction of index CFD’s, it is now possible to invest in any market or sector. Fund managers rarely outperform the benchmark index, in fact it is well known that 80% of fund managers under-perform the index. Fund managers are disadvantaged in numerous ways. Firstly, their fund is forced to be weighted similarly to the index. This in effect means they must buy what is going up, and sell what is going down. As a result they often buy the top and sell the bottom. Secondly, their large size means they must buy and sell large amounts. This volume affects the market, meaning they pay more when buying and get less when selling. The large volumes required mean they must trade in high cap liquid stocks, missing many opportunities in smaller, more volatile stocks.
Many active funds are wusses. To beat the index takes skill and risk. WIth increased risk means you may get 30% in one year and -25% the next. Many funds will hug the index in bad times so that they don’t look like they are doing too bad. But then logic tells you that why pay extra fees for a fund that hugs an index?
brisbane welcome – good to see someone else from brisvegas. I agree withe the other comments about navigator and managed funds but to answer your other question, it would generally be more beneficial to have the investment in the name of the higher income earner if you are looking at claiming interest deductions etc