Record low interest rates mean investors seeking higher returns must look beyond the traditional safeJ harbours of bank deposits and hybrids to higher risk investments.
However, as risk rises so does the need for transparency. We have all witnessed the collapse of investment firms where investors did not know what the underlying assets were.
Investor education is the key to avoiding these pitfalls and finding the path to higher yields. A time-proven strategy of careful diversification based on research provides an opportunity to increase returns.
From my experience in financial markets, not everyone understands all asset classes and their risks. In particular, as the non-bank lending market grows, investors need better education to make informed decisions and understand their risks. For example, the CRE market (Commercial Real Estate) currently offers superior risk-adjusted rewards for investors seeking income.
Investing in a first mortgage-backed offering with an investment return of 8% per annum is a compelling offer.
Even more compelling is that luxury real estate in Sydney’s eastern suburbs would need to fall 35% in 12 months before any risk of impairment.
This risk-adjusted return is almost impossible to beat compared to other debt investment products.
To recognise the quality of this type of offering, it’s extremely important for investors to conduct due diligence on an offering company and its underlying assets. Highly competent fund managers can help ensure you are making wise investments.
To make sure you are picking the right manager:
- Check their track record
- Choose fund managers who pick up the phone and speak to you; opt for personal service, not just an impressive software platform
- Ask for their investment criteria.
As the great Benjamin Franklin once said, “An investment in knowledge pays the best interest.”
If you would like to learn more, or to speak about your portfolio needs, email me on email@example.com