Options other than Term Deposit/Savings Account

[milt1968]

I have $50,000 I want to invest in something OTHER than a term deposit or on call savings account. The 4% is ok, but is not that appealing to me.

What other options do I have?

Interested in mid to possibly-high risk.

T

[BIRMANBOY]

I would spend a few bucks and consult with an AFA as your first port of call. They will help you quantify your "risk tolerance" and give you some options. I would record the conversation myself (tell them you are doing this of course) so you can revisit what they tell you.
http://www.fma.govt.nz/ this is the website I would spend some time on first. PS you say "mid to high risk" ...most financially aware people would say that is probably not "investing" but bordering on gambling?


I have $50,000 I want to invest in something OTHER than a term deposit or on call savings account. The 4% is ok, but is not that appealing to me.

What other options do I have?

Interested in mid to possibly-high risk.

T

[milt1968]

Hi BIRMANBOY thanks for the reply.

It is probably moving towards "gambling" I guess, but what I really mean is something with a potentially higher return than a basic term deposit at 4%.

My risk tolerance is moderate I believe.

I am just at the stage where I want to move into something different, towards something where the possibility for profit is higher.

I dont mind a little risk.

T

[Sideshow Bob]

Listed property trusts are an option. Typically pay quarterly, currently most are yielding 6-7%, many have DRP's at a discounted price.

Traditionally not ideal time with increasing interest rate environment.

[milt1968]

Have just begun looking into buying bonds. A little bit confusing but I will get my head around it.

[JBmurc]

SILVER BULLION pure silver miners giving it away for below costs to mine let alone costs to replace resources mined ... if you have a longer term outlook and are bullish on electronics going forward .do no harm to hold a few kilo's ,,,,can't get any lower risk than Bullion
Higher risk ---Quality U308 share

[Harvey Specter]

Hi BIRMANBOY thanks for the reply.

It is probably moving towards "gambling" I guess, Bonus bonds ;)

[milt1968]

Bonus bonds ;)

Chances are very low of actually winning anything. Had a substantial amount in for 6 months and came out a whole $160 up.

[Harvey Specter]

Chances are very low of actually winning anything. Had a substantial amount in for 6 months and came out a whole $160 up.But it could have been up $1m.

Was definately a joke though.

Whats your timeframe - you could split it across a few yeild stocks on the NZX reducing the risk that you will lose capital. RBD, TEL, Property, WHS, etc

[milt1968]

I have 2.5 years, then I will need the funds.

[Harvey Specter]

I have 2.5 years, then I will need the funds.YOu could gamble on a National government and buy power company shares. Better yeild than TD's, with the gamble being a Labour led govt.

[milt1968]

Got scaled 80% in my application for Genesis. Will have a look tomorrow to see how they are going.

[BIRMANBOY]

So let me get this straight...you need the funds in 2.5 years and you are looking at moderate to high risk?????? I would rethink your strategy Milt. The share/bond market is not somewhere I would put money if I needed a certain amount back in a certain time frame...especially given your admitted propensity to "risky behaviour". There is no guarantee the market and/or your money will be where you need it to be at the desired point in time. As I said originally go find an AFA ...GIVE THEM all the information and have a good think about it. PS whatever you do don't go the "precious" metals.
I have 2.5 years, then I will need the funds.

[milt1968]

Im not looking for a particular level of risk. I am looking for something with a better return than a 4% term deposit with my bank.

[BIRMANBOY]

How can you not consider risk when you are looking for returns? Anything outside of a Bank deposit increases the risk. That's why they offer such low returns-they minimize your risk. Risk-reward ..its a sliding scale.. the further up the scale your "better returns" are changes the risk factor or your chances of losing some to none of your money. If you are looking for the holy grail of good returns and no risk you will realize that it isn't available. This therefore leads one to explore where exactly you sit on the scale as to risk tolerance, desired returns. in your particular situation, as you have articulated it so far, this is complicated by needing the funds back in 2.5 years. Have I got this right? If so, then you need to talk a professional so they can combine your information and individual quirks to what is best suited. Posting on here will get you nowhere because we are not privy to your financial details, your particular circumstances and very few of us (if any) are authorized financial advisors. As an exercise in idle curiosity by all means but 50,000 warrants a bit more respect in my opinion. However each to his own. My last comment.
Im not looking for a particular level of risk. I am looking for something with a better return than a 4% term deposit with my bank.

[milt1968]

Where did I say I was looking for the holy grail of good returns with no risk?

Am new to this and was asking for a little advice not a lecture.

T

[andrewfreestuff]

Where did I say I was looking for the holy grail of good returns with no risk?

Am new to this and was asking for a little advice not a lecture.

T

You've been given some fairly good advice milt, if I were you I wouldn't bite the hand that fed you. I'm sure many people here have seen the consequences of not respecting risk and are simply trying to educate you so you don't fall on your face as others have done.

With such a short timeframe until you want the money out, your options to beat the bank rate is probably limited unless you are prepared to take a gamble. And gambling with a short timeframe doesn't give you much time to lick your wounds and recover if it all goes pear shaped. Its up to you as to whether you could handle losing a big % of your money and still do what you need in 2.5 years - if the answer is no then you should take the safer option.

However, can anyone here give milt advice on how to check out the trading rates for bonds maturing in 2 years? This may be an option where the rate is better than a bank for fairly high quality bonds. But then again, with such a short timeframe it's likely that for quality bonds their trading rate will have moved fairly close to the bank rate (yes? otherwise you could borrow and invest and make free money...?)

[andrewfreestuff]

My last comment.

I've enjoyed reading your comments on this matter Birmanboy, perhaps reconsider if you think you still have more to add - others may find it useful.

[milt1968]

Have done a quick review and it isnt crucial that I have the funds available in 2.5 years. I respect the risk, am just looking for options other than term deposit. Simple as that. It is an amount I have set aside for something different, my life will not revolve around the investment and if it goes a little pear shaped I will be able to handle that. Just looking for something different with the money I have aside. Still learning.

[peat]

Even allowing for a moderate risk acceptance, equities are pretty much ruled out with a 2.5 year time frame... therefore debt instruments become the main alternative.
If one wishes to UP the risk/reward above bank term deposits then finance company debentures come into consideration. THey will offer higher interest rates but of course there is increased risk of capital loss which can be mitigated by reviewing the issuers profile and selecting accordingly.

[milt1968]

Even allowing for a moderate risk acceptance, equities are pretty much ruled out with a 2.5 year time frame... therefore debt instruments become the main alternative.
If one wishes to UP the risk/reward above bank term deposits then finance company debentures come into consideration. THey will offer higher interest rates but of course there is increased risk of capital loss which can be mitigated by reviewing the issuers profile and selecting accordingly.

Thanks peat, will look into it.

[Lizard]

Im not looking for a particular level of risk. I am looking for something with a better return than a 4% term deposit with my bank.

Maybe have a look at the Rabodirect Managed Fund (http://www.rabodirect.co.nz/landing/managed-funds/index.html?WT.srch=1&WT.mc_id=NZ01330&gclid=COW90NqR5L0CFZclvQodzLAAIw) platform?

If I was starting over, I think I would leave 30-50% in higher interest cash a/c and split the fund portion across at least 4 funds from different managers and only buy one holding every two-three months (spread timing). Also select from different geographical areas and/or investment strategies (value? growth? index? equities? bonds?). Then I would re-balance between cash and funds (and between the individual funds themselves) every three to six months... that way, if the market goes down, I would theoretically have a good chance of buying more at the bottom and making back any losses, without having to use any expertise in market timing and/or stock-picking.

Of course this doesn't carry any guarantee that I would do better than term deposit or wouldn't lose money... it just removes some of the volatility from a portfolio of fund assets. With a longer time horizon, keeping so much in cash would probably dampen my returns though.

[milt1968]

Back in the term deposit it goes..

[Banksie]

Back in the term deposit it goes..

Lol - did you manage to get more than 4% though? You should be able to get around 5% for your amount and time period.