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At 2020, our motto is to empower you with the tools and information to make and execute investment decisions in the most cost effective manner. As well as having 'Investor Education' at your disposal, this interactive Q&A section is where you can have any pressing investment question answered.
Please send us an email with your question and your answer will be published here.
Q. How can I research and select managed funds?
A. When it comes to deciding which fund to choose for investments or superannuation many investors are uncertain as to how to go about researching and comparing the available products. Though 2020 DIRECTINVEST cannot tell you which funds you should invest in, we do provide a number of tools to help you make and execute your investment decisions in the most cost effective manner.
2020 DIRECTINVEST provides you with a Find-a-Fund tool which allows you to access independent fund research and fund ratings from Morningstar and independent fund ratings from Standard & Poor's. For more information please see How to find a fund and What the star ratings mean.
You can increase your chance of investment success by following a few simple rules. It is worth keeping in mind that diversification reduces risk – your investment plan should include a mix of investments from different asset sectors available. Entry fees and management fees should also be considered, as small differences in fees and costs can have a substantial impact on your long term returns. For more information on investment concepts which can help you manage your own wealth, please see Investment Basics.
Q. Some fund managers limit investments in their funds to approved advisers. Does this mean I can't invest in it via 2020's Personal Choice eWRAP platform?
A. There are a number of funds on the eWRAP platform that can traditionally only be accessed via selected advisers. The 2020 DIRECTINVEST Personal Choice eWRAP is a direct access model wrap account which lets you access over 300 wholesale managed fund options without the need of a financial adviser and unnecessary adviser service fees. As you are subscribing to the eWRAP platform via our dealer group, this will bypass the restrictions a fund manager may place on investors accessing their funds via a specific adviser. So long as they are an available option on the platform, you will be able to invest in a given fund via 2020 DIRECTINVEST and Personal Choice eWRAP.
Q. Managed Funds now show the fees charged on your account and the amount deducted from your account as "other management costs" on the quarterly statements. Are these fees tax deductible at the end of the year?
A. Different fund managers classify their fees slightly differently but other management costs or fees normally refers to things such as investment expenses and custody fees which are typically in addition to the fund manager's management fee and any performance fee, if applicable. Details of all fees and how they are calculated will be in the Product Disclosure Statement for the particular Fund.
While we are not able to provide taxation advice and you should check with your accountant on this, normally expenses incurred in deriving income can be claimed as a tax deduction. However, in the case of management fees and costs, as the fees and costs are not a direct expense to the individual these costs are not considered as tax deductible to the individual. These fees and costs are normally deducted from the investment option and not charged directly to individual investors. The unit prices for the fund are nearly always net of these management costs. (The above is general in nature. Seek advice before making financial decisions.)
This answer was courtesy of Andrew Ramsay, a 2020 DIRECTINVEST ADVICE adviser. To speak to Andrew or a 2020 DIA adviser in your state, please complete this form
Q. What is the CRB Index? Does it track commodity or material prices? When the index is up, does it mean that the shares of certain companies are likely to be up?
A. The CRB Index has served as the most widely recognized measure of the global commodities markets. This index tracks commodity prices. When the CRB Index goes up, the prices of certain commodities have gone up. Only settlement and last-sale prices are used in the Index's calculation, bids and offers are not recognized. The fluctuations of the CRB Index have a certain influence on stocks, bonds and currencies, so it is likely that the stocks of certain companies might go up. You can never be a 100% sure though that this has an immediate impact.
Q. I’m 45 and have a Self Managed Super Fund, can I use gearing in my superannuation fund?
A. Changes to the SIS act permit the trustee of a SMSF to borrow in prescribed circumstances and gear directly into instalment warrants as of the 24th September 07. The fund has to acquire the asset (eg. real business property, art or shares) at arms length and the asset has to be help on trust. Note that the assets of the SMSF can’t be used as security to purchase assets and the SMSF would have beneficial ownership. Any interest incurred from the loan would be tax deductible to the SMSF and when the loan is paid off the asset transfers to the SMSF (stamp duty could be payable). A strategy of this nature needs to be set up correctly by Financial Planners and Special Council to avoid breaches. (The above is general in nature. Seek advice before making financial decisions.)
This answer was courtesy of Christopher Heppingstone, a 2020 DIRECTINVEST ADVICE adviser. To speak to Christopher or a 2020 DIA adviser in your state, please complete this form
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