Apply Online
Contact Us
Hejaz Financial Services
Apply Online
Schedule a call
  • Superannuation
    • Super 1
      • Superannuation

        Become an Islamic Superannuation member and receive a $100 welcome gift card.

        Learn more
    • Super 2
      • Products
        • Islamic Superannuation
        • Islamic Pension
    • Super 3
      • Things to know
        • How we invest
        • Performance
        • Consolidating your super
        • Grow your Super
    • Super 4
      • Tools & Resources
        • Retirement calculator
        • Super FAQs
        • Super Login
  • Investing
    • Invest 1
      • Risk Profile Quiz

        Take our quick Risk Profile Quiz to find the right investment product for you.

        Get started
    • Invest 2
      • Products
        • Overview
        • Income Fund
        • Balanced Fund
        • Property Fund
        • Equities Fund
    • Invest 3
      • Things to know
        • Getting started with investing
        • 9 Golden rules of investing
        • Compounding: it’s simply magic!
        • Should you invest your house deposit?
    • Invest 4
      • Tools & Resources
        • Investment FAQs
        • Forms & Documents
  • Finance
    • Finance 1
      • Finance

        We're on a mission to help more Muslims own their own home

        Apply online
    • Finance 2
      • Products
        • Overview
        • Gold home finance
        • Flexible home finance
        • Essentials home finance
        • Deposit Builder
    • Finance 3
      • Things to know
        • Sharia compliance
        • Home finance process
        • Refinancing process
        • Investment property guide
    • Finance 4
      • Calculators
        • How much can I borrow?
        • Extra repayments
        • Stamp duty calculator
        • Offset calculator
  • Hayat Protection
    • Hayat 1
      • Hayat Protection

        Protecting everday Muslim Australian's and families.

        Learn more
    • Hayat 2
      • Products
        • Overview
        • Family Protection
        • Illness Recovery
        • Critical Care
        • Loss of Income
    • Hayat 3
      • Things to know
        • No protection? Why take the risk?
        • Plan for the unexpected now
        • Protect yourself through super
        • What’s the right cover
    • Hayat 4
      • Tools & Resources
        • Hayat protection calculator
  • About
    • About 1
    • About 2
      • Who we are
        • About Hejaz
        • Our History
        • Our People
        • Investing In Our Community
    • About 3
      • More
        • Media
        • Insights
  • Support
    • Contact 1
      • Call Us

        Available 9:00am to 5:00pm weekdays AEST/AEDT

        1300 043 529
    • Contact 2
      • Schedule a Call

        Schedule a call online with a time and day that suits you

        Schedule online
    • Contact 3
      • Help Centre

        For FAQs, useful information, resources and documents

        Explore centre
    • Contact 4
      • Contact Form

        Use our online contact form for quick and convenient responses

        Contact now
Hejaz Financial Services
Introduction to Investing

Introduction to Investing

By hejazfs inInvestments

Whether it’s taking a more active interest in your superannuation, starting to build an investment portfolio, or even trying your hands at playing the stock market, we can all benefit by understanding the language and key concepts of investing. Here’s a quick introduction to investing.

 

Asset classes

There is a huge range of potential investments out there, and these can be grouped together in asset classes that are based on shared characteristics. There are many asset classes, however we will focus on the 2 most mainstream and major ones shares (or equities) and property.

• Shares give investors part ownership (usually a very small part) in specific companies. The share market sets the value of each share and prices can fluctuate significantly, even from day to day. This price volatility means that, relative to other asset classes, shares are higher risk, particularly in the short term. However, investors expect to be rewarded for taking on this risk by the potential for shares to deliver higher long-term gains than the other asset classes. Shares may also provide regular income in the form of dividends. It’s common to split this asset class into Australian and international shares.

• Property also provides investors with full or partial ownership of growth assets. Income is received in the form of rent and property also has a strong history of providing capital growth. It is common to further subdivide this asset class into residential and commercial property, as these subclasses can have their own property cycles. As property can, at times, fall in value, it is considered a medium to high-risk asset class.

 

Why are asset classes important?

One of the golden rules of investment is that when seeking higher returns, investors must take on a greater degree of risk. As it relates to investment, risk can be thought of as volatility or uncertainty. Some quality investments may provide a high certainty of a particular return. They are low risk, and the returns they offer reflect this. However, for any given share, we don’t know what its price will be in a week, a month or a year. Prices may be volatile, the return is uncertain, so a share is a higher risk investment. However, that risk can be a positive thing – upside risk – which is the potential for the share to generate a higher than expected return.

Asset classes bundle together investments with similar risk and return profiles. By blending these asset classes together in different proportions – a process called asset allocation – investors can construct portfolios that provide levels of risk and return that suit specific needs. Typically, a retiree may want a portfolio that minimises their risk and provides more stable returns. A 30 year old with an investment time horizon of decades may be happy to take more risk, in the knowledge that, over the long term, growth assets (shares and property) have delivered the highest returns.

This blending of different asset classes results in diversification, which is a critical risk management tool. As different asset classes over and under perform at different times, mixing different asset classes lowers the volatility, and hence the risk, of a portfolio.

As far as returns are concerned, studies have shown that over 90% of a portfolio’s performance is determined by the asset allocation. It’s vastly more important than individual investment selection or the timing of purchases and sales.

 

Indexing

There are many different indices that track the performance of each asset class and its subclasses. The Australian All Ordinaries Index, for example, follows the fortunes of Australia’s 500 largest companies. The Australian Fixed Income Index Series tracks the performance of higher quality Australian bonds.

Given the importance of asset allocation and the difficulty of picking winning and losing shares or other assets, many investors are content to accept the performance delivered by each asset class. An easy way to achieve this is to invest in index funds. With a small number of these funds, it’s possible to deliver diversification both across and within asset classes, along with any desired asset allocation.

 

Help is at hand

Of course, there’s more to investing than can be conveyed in a short article, but that’s no reason to delay putting the various markets to work. Our financial advisers can help you understand your risk comfort level, and design an investment strategy that’s right for you.

 

At Hejaz Financial Services, our investment products are build and managed by expert teams with years of experience and deep, human understanding of markets. We are focused on taking your investment to a whole new level, setting the management of your wealth as our priority.

Learn more about our Premier Islamic Financial Services here.

158
Like this post
  • Consolidating your superannuation
    Previous PostConsolidating your superannuation
  • Next PostA lifetime of Superannuation
    Consolidating your superannuation

Related Posts

Halal Investing vs. Ethical Investing
Investments Superannuation

Halal Investing vs. Ethical Investing

Should you invest your house deposit?
Finance Investments

Should you invest your house deposit?

Compounding: it’s simply magic!
Investments

Compounding: it’s simply magic!

Islamic Finance: Why 2022 will be the year of ethical and impact investing
Investments

Islamic Finance: Why 2022 will be the year of ethical and impact investing

For general information, documents & forms, support and FAQs

Visit the Help Centre
Hejaz Logo

Need help? We’re
always here to
answer your questions

Resources

  • Media
  • Contact us
  • Knowledge Base
  • Insights
  • Important Documents

Products

  • Superannuation
  • Investments
  • Home Finance
  • Hayat Protection
  • Pension

Hejaz Financial Services © 2022 / All Rights Reserved

Hejaz Capital Pty Ltd ABN 44 161 857 478 T/As Hejaz Financial Services is a Corporate Authorised Representative of Hejaz Financial Advisers Pty Ltd ABN 49 634 683 613 AFSL 517686

Refer a Friend
Privacy Policy
Legal Notices
FSG
Schedule a Call
Knowledge Base
Apply Online

Call us: 1300 043 529

Copy