Index Funds

We can save you money.
I have heard that some people are charged as high as a 5% entry fee and an ongoing fee of 1% per annum. There is a better way...
What are they? Should you be invested in them?

Index funds are a simple form of investing in the share market. They take away any need for you to make a decision on what shares you should hold, when to buy and when to sell. Buying into index funds is simply an “invest and forget” strategy, which over the longer term will produce you overall a good result.  

The only real trap with this sort of investing is the fees associated with the investment. Due to the nature of this investment your adviser can not add much value in terms of advice and as such their fees should reflect this. I have heard that some people are charged as high as a 5% entry fee and an ongoing fee of 1% per annum.

There is a better way; you can buy index funds directly on the stock market which means you will only pay brokerage on the purchase and sale of the investment. Depending on the size of the investment you could expect to pay between 2.5% and 1.00% brokerage but the real gain is in the fact that there is no on going fee. Given that you would normally hold an index fund for more then 10 years this will add real value to the overall return on the investment.

So what is an Index Fund?

You would have heard of the All Ord’s Index, this is the index we use to measure how the Australian market has performed on any given day. To calculate the index the stock exchange looks at the price increase or decrease of the top 500 companies and works out on average how the collective of shares has performed. Index funds merely hold these shares in the fund which means that it will track directly inline with the index which it is copying.

If this type of investment interests you, give us a call on 07 4771 4577 and we will save you money from the start.