Many investors start their investment journey with a self-directed approach. However, as they accumulate assets and achieve their wealth goals over time, it’s common for them to reach a point where they can benefit from a managed investing approach.
Managed investing involves a professional investor selecting which investments to buy and sell and when. Investors are typically pooled together into a managed fund (also known as a ‘managed investment scheme’ or ‘MCIV’) or Exchange Traded Funds (ETFs). Investors are often allocated a fixed amount of ‘units’ in a managed fund or shares in an ETF, which is then invested in the funds. Managed funds have a range of fees, so it’s important to understand them and choose one that suits your risk profile.
For example, if you invest in a diversified portfolio that includes stocks and bonds, you may pay an ongoing management fee that’s calculated as a percentage of your overall investment balance. This fee will reduce the net return you receive from your investment. Similarly, if you choose to invest in a passively managed fund that seeks to replicate the returns of an index such as the ASX 200, you may pay a lower administration fee.
Another factor to consider is the impact of taxes on your returns. Some managed accounts seek to mitigate taxes by buying and selling their underlying assets at times that are most beneficial for the investor. For instance, a diversified equity portfolio might buy and sell stocks at different times of year to minimise capital gains tax.
A managed account might also invest in a ‘life insurance bond’, which is like an ordinary bond but has an underlying asset that pays a regular income to investors. This type of managed account is a great option for investors who want to receive a secure and consistent return over the long term.
The key reason to consider managed investing is to take advantage of the expertise and experience of an expert wealth manager. A wealth management advisor can create a tailored strategy for your needs, giving you peace of mind that your financial plan will grow with you. They will keep an eye on your portfolio and rebalance it when necessary, so you don’t have to. In addition, they can help you navigate complex issues such as tax strategies or legacy planning. Managed investing