Apply Online
Contact Us
Hejaz Financial Services
Contact Us
Apply Online

COVID-19 update

Business as usual

Refer a friend

View offer

  • Islamic Super
    • Super 1
      • Why choose Islamic?
        • Islamic superannuation
        • Compare the pair
        • How we invest
        • Sharia compliance
    • Super 2
      • Managing your super
        • What is super?
        • Growing your super
        • Combine your super
        • Access your super
        • Changing Jobs
    • Super 3
      • Switch
        • Apply online
        • Fees & costs
        • Islamic pension
        • Benefits of being a member
        • Frequently asked questions
        • Member login
    • Super 4
      • Australia’s Best Performing
        Islamic Super Option
        FY19/20

        Learn more
  • Investments
    • Investments 1
      • Investment options
        • Balanced fund
        • Islamic Income Fund
        • Income fund
        • Hejaz Premier
    • Investments 2
      • Things to know
        • Investing cash
        • Performance
        • Investment basics
    • Investments 3
      • Invest
        • Apply online
        • Global Ethical Fund login
        • Ethical Income Fund login
        • Frequently asked questions
    • Investment 4
      • Grow your net worth

        Islamically

        Start investing
  • Finance
    • Finance 1
      • Finance options
        • Home finance
        • Investment property
        • Refinance
    • Finance 2
      • Things to know
        • How it works
        • Islamic certified
        • Property buyers guide
        • Investors’ guide
        • Obtaining finance
    • Finance 3
      • Finance
        • Apply online
        • Find me a property
        • Calculators
        • Member login
    • Finance 4
      • ZERO Application

        Fee*

        Learn more
  • Plus Services
    • Advice 1
      • Advice options
        • Financial planning
        • Estate planning
        • Tax advice
        • Wealth protection
    • Law 1
      • Law options
        • Islamic wills
        • Conveyancing
        • Immigration
    • Accounting 1
      • Accounting
        • Tax return
        • Self managed super
        • Bookkeeping
        • Corporate secretarial
  • About Us
    • About 1
      • Hejaz
        • About us
        • Our history
        • Our vision and mission
        • Our people
        • Hejaz Pathways
    • About 2
      • Successfully

        Investing in

        the community

        Learn more
  • Learning Centre
Hejaz Financial Services
21Jan

Basics of Obtaining Finance

January 21, 2021 hejazfs Investments 78

Obtaining finance for a home purchase can be a complicated process, and there are certain criteria that we require borrowers to meet before we will agree to finance your home. This article provides some information on how applications for credit are assessed, giving you a greater understanding of how you can get into a position to have your next application approved.

Here are 5 things you need to know before obtaining your home finance.

 

1. Serviceability

One of the factors used to assess an application is the judgement on the ability of the applicant(s) to make the finance repayments without experiencing financial hardship. We will consider a range of factors including income, expenses and other liabilities in order to determine whether the applicant will be able to comfortably make the finance repayments, even in the event of a rent rate increases.

 

2. Loan-to-Value Ratio (LVR)

Another factor considered is the Loan to Value Ratio (LVR). This is the amount you are planning to borrow as a percentage of the value of the property. Any savings the borrower has can be used to reduce the amount being borrowed which will, in turn, reduce the LVR. The LVR is important because if the borrower is unable to repay the finance and we are required to repossess the security property, we will want to ensure that the value of the property provides sufficient equity to repay outstanding debt(s) and ijarah.

 

In many cases, we will lend up to 75% of the value of the property. If the LVR is higher than 80% mortgage insurance will usually be required. Mortgage insurance serves to protect us against the borrower being unable to repay the finance. The mortgage insurance premium is normally paid by the borrower. When mortgage insurance is involved, the application must satisfy the lending criteria of the mortgage insurer as well as us.

 

3. Credit history

The credit history of the applicant(s) is also considered. If an applicant has previously defaulted on a loan, has missed a credit card payment, or has been declared bankrupt, this will reflect on their credit history and will be accounted for when the lender is assessing the application.

 

4. Verification of financial information

Upon applying for finance, borrowers will be required to provide verification of their financial information including proof of income from their employer, bank statements demonstrating savings, and details on other assets and liabilities. We will require such information to ensure that the applicant meets the appropriate finance criteria.

 

Some applicants, however, may not be in a position to provide such information. For example, those who are self-employed may not have the ability to provide proof of income. For these applicants, a different type of finance exists – low documentation or ‘Lo-Doc’ finance. On Lo-Doc finance, we do not require the same level of evidentiary documentation as with a “fully verified finance”. As the finance is considered a higher risk to us a higher Ijarah rate may apply and maximum LVR limits are lower than those applied to fully verified loans.

 

5. What to do if you’ve had a finance application declined

While we may decline an application, this doesn’t necessarily mean the customer can never finance from us at some stage in the future. It simply means that based on the applicants’ current financial situation, the proposed purpose of the finance and/or the borrowers’ credit history, we are not prepared to finance at that time. It may be that a prospective borrower needs to save more, borrow less or wait for a pay rise.

 

After going through this article, we hope that you have gained a better understanding of obtaining finance and that you will be in a better position to have your next application approved.

 

At Hejaz Financial Services we offer Islamic home finance for your property. Obtaining Islamic home finance isn’t as hard as you think, we take the stress out of planning, budgeting, and paperwork so you can focus on the important finishing touches for your new home. We have helped countless families finance their dream home, and you are no exception.

Learn more about our Islamic home finance here.

Read more
17Dec

Australian Shares

December 17, 2020 hejazfs Investments 82

Investing in shares

Investing in the sharemarket provides a way of participating in the future profits and growth of Australian and international businesses. In Australia, there are more than 2,000 companies listed on the stock exchange, representing a market capitalisation of $1.69 trillion*.

Risk/return characteristics

Shares are generally considered a high-risk and high-return investment and are suitable for longer-term investors.

Historically, Australian shares have provided long-term growth well above inflation. However, shorter-term sharemarket returns have experienced higher volatility at times.

Sharemarket investors may expect a negative return approximately once in every five years or so, which is why shares are suited to longer term investors. Time greatly reduces, but does not eliminate, the volatility in returns from shares.

Sharemarkets move in cycles, reflecting the underlying strength of the economy, political factors, industry trends and market sentiment. On any given day interest rate and inflation expectations, company profits, dividends, economic growth figures and the rise or fall of our dollar may have an impact on share prices.

Income and capital growth

While shares are primarily a growth asset, they may also provide a good source of income.

Most companies distribute a proportion of their profits in the form of dividends. Companies that pay high dividends tend to be blue chip companies like those in the banking, insurance and retail sectors. Some companies, like those in the mining sector or newer industries like biotechnology, may retain dividends to fund future research, expansion or exploration.

Actual yields may change dramatically from year to year and vary from company to company. If company profits are not growing, dividends are likely to be stable and if profits fall, a company may have to reduce dividends.

Tax benefits

Dividend imputation is the main reason Australian shares are so tax effective. Given companies have already paid tax at the company tax rate, investors can use franking credits to offset the amount of tax they pay on dividends and have any excess credits refunded. The higher the franking level the greater the benefit.

Some companies pay fully franked dividends, with the maximum imputation credit of 30 per cent (equal to the company tax rate). Other companies pay partially franked dividends where the imputation credit will vary depending on the amount of tax they have paid on their profits.

Implementing your portfolio

You can invest in the sharemarket directly or through a managed fund. One of the major benefits of a managed fund is that you can access a much wider range of investments than you can investing directly yourself. Another is that your assets are professionally managed.

Index-tracking traditional index funds and Exchange Traded Funds (ETFs) invest in all or a representation of stocks in a selected index with the aim of producing index returns, before fees. By contrast, many active Australian share funds hold between 30 and 70 stocks, out of a universe of around 200 to 300 securities depending on the index used.

*Australian Securities Exchange. End-of-month valuation, July 2015.

 

At Hejaz Financial Services, our investment products are build and managed by expert teams with years of experience and deep, human understanding of markets. Learn more about our Premier Islamic Financial Services here.

Read more
03Dec

Getting started with investing

December 3, 2020 hejazfs Investments 84

Getting started with investing

There are many different ways to invest and the solution you choose will depend on your individual situation: how much you are investing, the degree of access you need to your money and what your financial goals are, both professionally and personally. It’s also important to get clear on the level of risk and return you want to be exposed to.

 

Diversification

All investments involve risks. Diversification is a way of managing the risks associated with investing. It involves spreading your money across different asset classes and investments, so as to limit the impact of negative events on any one asset class or investment. Diversifying across asset classes protects you against underperformance in any one asset class. Your asset allocation will reflect how cautious or aggressive your investment strategy is.

 

Can you comfortably watch your balance go up and down?

Some people find it easy to stay relaxed while their investments rise and fall in value. Others feel nervous if their assets drop in value by even the tiniest amount.

If you’re going to lie awake at night worrying, it’s not likely to be worth the personal cost, no matter how high the returns you might make.

Talking to someone about your ability to cope with financial stress can help you decide how you feel about taking on investment risk, even if it’s just a member of your family or a friend whose opinion you respect.

A professional financial planner should also be able to help guide you through some different options and outline the different levels of risk involved.

 

How to reduce your risk

No matter what your temperament, exposing your hard-earned savings to any kind of risk will always be a bit scary – especially if you’re doing it for the first time.

Some simple strategies to reduce risk that even the professionals still follow include:

  • Think long-term: While there are exceptions, fluctuations in the value of your investments should even out over time, so the longer you stay invested, the less investment risk you are exposed to.
  • Choose the right investment for you: Thinking about your goals, how soon you want to access your money and how likely you are to worry will help you decide which investments are right for you.
  • Try to avoid putting everything you’ve got into one investment: Spreading your money across different types of investments may protect you from sudden market falls and deliver more consistent returns over time.
  • Learn how things work: The more you understand about investing and financial markets, the better you’ll become at choosing the right investments for you. You’ll also be less likely to act blindly on a tip you might hear from a family member or friend, without first doing your own research.

 

Getting started with investing may be daunting, 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. Learn more about our Premier Islamic Financial Services here.

Read more
19Nov

Introduction to Investing

November 19, 2020 hejazfs Investments 82

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.

Read more
05Nov

The foundations of successful investing

November 5, 2020 hejazfs Investments 82

The foundations of successful investing

This article explains the important foundations of a strong investment portfolio based on 4 principles – quality, value, diversity and time.

Establishing an investment portfolio can be likened to building a home. The most destructive, yet unpredictable predator to the structure of a home is the weather. Even in these most technically advanced days, we are still unable to accurately predict the weather.

Like the weather, the future of the global economy can be the most unpredictable and destructive threat to your investment earnings. But with a carefully built portfolio based on sound foundations, you have a much better chance of weathering a financial storm.

 

Investment principles

The foundations of successful investing and a strong portfolio rely on four key ‘pillars’ or investment principles. Quality, Value, Diversity and Time.

We are probably all tired of the old line, “don’t put all your eggs into one basket” – meaning to diversify your portfolio – but that is only one pillar on which to rely. The other three are equally important. Forget about just one and you are setting yourself up for a collapse.

Let us briefly explain why all four pillars are crucial to your investing success.

 

Quality and Value

If we look at the first two pillars, quality and value, it’s obvious this means to look for assets that are expected to provide higher returns relative to their risks. Applying this to shares, quality companies should have a sound basis to their operations and growth; that is, their earnings are not driven by fads. This however, might mean they take time to deliver. Remember that investing in the share market is generally a long-term strategy.

Quality and value don’t always go hand in hand. Quality stocks may trade at such high prices that they offer low initial value or it could be that expectations for these companies are sometimes too high. The key here is quality… the expectation is that they will be around for a long time, not just a good time.

 

Diversify

This takes us back to diversity. Diversity acts like the scales in a portfolio, providing balance. True diversity in a portfolio gives the investor the opportunity to take advantage of “hot stocks” or asset classes, whilst balancing out the risk with quality stocks and asset classes. It can provide a buffer against mistakes in assessing value because nobody gets it right all of the time. A well-balanced portfolio should be designed to cope with occasional losses.

 

Time

And finally, the pillar of time applies to the previous three. It can give you the best chance of success. Every market will suffer periodic downturns, however over time the upturn will always triumph. The golden rule is don’t panic and get caught up in the fear and greed cycle. It’s about time in the market, not timing the market.

Past performance is not indicative of future results, nobody can successfully predict the future of the global economy. The best way to set yourself up for investing success is to make sure your investment portfolio is based on the four solid foundations and monitored consistently.

At Hejaz, our investment products are build around the core foundations and is 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.

Read more
15Oct

The benefits of investment diversification

October 15, 2020 hejazfs Investments 81

This article explains the benefits of investment diversification and simple ways to achieve investment diversification across asset classes.

When it comes to financial management, no single investment will continually outperform all other investments all of the time. To minimise potential losses and to smooth your investment returns over the longer term, you should spread your portfolio across various investments. But that can be easier said than done, so here are different ways to diversify.

Diversify across asset classes

Asset classes are the broad categories of investments and include equities, property and cash investments. Equities include both Australian and international shares. While property includes residential, retail and commercial properties.

Lower risk asset classes, like cash protects your capital during adverse market conditions. On the other hand, higher risk assets, such as Australian and international shares, can deliver good returns during the boom times. Holding a mix of asset classes may help to provide more stable returns over the medium to longer term as markets rise and fall.

Diversify within asset classes

This could mean spreading your share portfolio across different industry sectors because certain sectors may outperform others over a given period according to economic conditions.

Two good examples are mining and manufacturing. The Australian resources industry helped keep Australia’s economy a shining light against a gloomy international backdrop following the Global Financial Crisis. Manufacturing, on the other hand, struggles with high labour costs making Australia less competitive against low income countries such as China. The future is uncertain, and both of these industries are facing volatile conditions. So, a balance across industries is crucial to maintain stable returns over the medium to long term.

It can be simple

Even with a relatively modest amount to invest and very little time, you can achieve a balanced portfolio with the right mix of investments.

Managed funds offer easy access to a wide range of investments. By investing in a managed fund, professional fund managers select individual investments for you. In addition, most managed funds offer several different options to cater for varied levels of investment risk.

Other options include purchasing shares in Listed Investment Companies (LICs) and Exchange Traded Funds (ETFs) on the stock exchange. Depending on its charter, a LIC holds shares in a wide range of companies. While ETFs invest across all stocks making up a particular index, such as the S&P/ASX 200. Buying shares in an ETF or LIC gives you exposure to all the stocks held by the fund.

 

There are many benefits of investment diversification. At Hejaz Financial Services, our Halal Managed Funds are fully diversified, managed professionally and Sharia compliant. Our fund managers have a breath of experience and they are carefully and consistently monitoring your investments. We are focused on taking your return on investment to a whole new level, learn more here.

Read more
08Oct

Property Buyers Guide

October 8, 2020 hejazfs Investments 78

There are several important things to consider when you are buying a property, it will be one of your biggest investments so make sure there are no surprises when you move in. This property buyers guide will list 6 things to take note of before you make the purchase.

 

1. Checking the title

A title is a short name for “Certificate of title”. The title gives details about the registered owner and details of any easements, mortgages, covenants etc.

Check:

  • whether there are any easements – an easement is something that restricts the ability to use the land, for instance, a driveway through your property to neighbours;
  • details about any mortgages; and whether there is a caveat – this is a warning sign that alerts you that someone else claims an interest in the property
  • If there is a mortgage or a caveat, it does not mean the property cannot be sold, but to give you a “good title” they must be removed by the seller before, or at, settlement. Remember, most properties have a mortgage that the seller will pay off with the money from the settlement.

 

2. Types of title

There are a number of different types of titles used throughout Australia. For example:

Torrens title – this is the most common title and gives the buyer a guarantee of “good title” because the title is registered.

Strata title – this is used for many flats, units and multiple living areas such as retirement villages. You usually get a title for your individual unit as well as one for your parking space (if you get one). You also have responsibilities for the common area through a structure called a body corporate.

General law or old system title – this was the original type of title used. There are not many general titles left.

Company title – under this structure you don’t own a title; you are allocated shares in a company that owns the title. When you sell your unit, you transfer your shares in the company. This is also less common now.

 

3. Buying off the plan

This is common in today’s property market, especially for inner city apartments and large developments. ‘Buying off the plan’ refers to buying a property before it is completed. The deposit that is paid secures the property and the contract, and the balance is paid when the property is completed.

 

Make sure you know:

  • What the property will look like when it is completed;
  • That you have somewhere to live during the construction of the building; and
  • Whether the developer has a track record or their work is available for inspection.

 

4. The local council

Check whether:

  • there is a vacant block of land next to or near the property and if there are any plans for a block of flats or apartments to be built next door. This might allow the neighbors to look over your back yard;
  • there are any zoning or building restrictions on the property;
  • the property is properly zoned for your use;
  • there are any buildings or other structures that were built without a permit;
  • wiring and plumbing have been legally connected.

 

5. The statutory authorities

Make sure you check with the statutory who can tell you:

  • whether they have any interest in the property you want to buy; or
  • whether there is something that is going to happen in the area that might affect your use of the property.

 

You should always get these certificates, even if it seems to be a waste of your time. You will want to know:

  • the “adjustments” on the purchase price resulting from unpaid or unused rates and taxes;
  • if there is some reason you will not be able to use the property in the way you intend, for example, if you want to renovate;
  • whether there are any major works, like freeways, to be built in the area; and
  • whether there are services, like gas and electricity available.

 

6. The cost

The potential costs include:

  • Property and pest checks
  • Title searches and rate certificates
  • Legal / conveyancing services
  • Finance costs
  • Stamp duty (you may be eligible for an exemption, contact your State Revenue Office for details)
  • Land titles office – registration fees

To ease the burden – make sure you read about government grants for new home buyers.

 

After going through this property buyers guide, we hope that you learned more about one of your biggest investments and that your home purchase will go smoothly.

At Hejaz Financial Services we offer Islamic home finance for your property. Obtaining Islamic home finance isn’t as hard as you think, we take the stress out of planning, budgeting, and paperwork so you can focus on the important finishing touches for your new home. We have helped countless families finance their dream home, and you are no exception.

Learn more about our home finance here.

Read more
01Oct

Choosing your investment strategy

October 1, 2020 hejazfs Investments 82

With the wide choice of investment options available today, choosing your investment strategy becomes a difficult task. You can choose from single sector funds like Australian share and international share funds, or diversified or multi-sector funds that include a mix of sectors like shares, cash and property.

Here are some factors to consider before choosing your investment strategy.

 

Investment types and risk

All investments carry some level of risk. The type and degree of risk will vary depending on the investments you choose. The trade-off for higher risk is usually a higher potential return.

Risk is typically measured in terms of the likelihood of achieving a negative return in any one year – the higher the risk level of an asset class the higher the likelihood of achieving a negative return.

Higher risk asset classes like shares are long-term investments, which means the longer you invest the less likelihood of your investment value falling. Not taking sufficient risk can be a risk in itself. For example, cash investments are less likely to grow over time and may not meet your long-term objectives.

 

Diversification

Spreading your money across a range of investments is one of the best ways to reduce your exposure to market risk. This way you are not relying on the returns of a single investment. Investment markets move up and down at different times. With a diversified portfolio of investments, returns from better performing investments can help offset those that underperform.

Holding a broadly diversified portfolio can also improve your performance potential and increase your chances of achieving market growth.

 

Getting your asset allocation right

Research confirms that how you allocate your assets to each asset class is more important to long-term performance than the individual stocks you choose.

Some investors prefer to leave the asset allocation decision up to a fund manager and invest in a diversified fund so they don’t have to worry about monitoring and rebalancing their portfolios.

Investors who want more control over their investments may decide to make up their own asset allocation by selecting individual asset class funds. If you decide to use this approach, you will need to be disciplined and monitor your investments on an ongoing basis and rebalance your investments in line with your asset allocation targets. Alternatively, you could ask your financial adviser to do this for you.

 

Your investment profile

Before choosing your asset allocation you will need to consider factors such as your:

  • Short, medium and longer-term investment objectives.
  • Investment timeframe.
  • Attitude to risk and return.
  • Current circumstances, limitations and future prospects.

The above factors will help you, or your adviser, identify your investment profile so you can determine the most suitable asset allocation for your needs.

Risk/return profiling is a tool used by professional and novice investors alike when determining investment profiles. It can be a detailed and individual process, so it is best completed under the guidance of a professional financial adviser.

 

Sometimes life doesn’t go to plan. So, it’s important to review your investment strategy if there are any major changes in your circumstances. If you need help, our professional financial advisers can determine the best investment strategy for your investment timeframe, objectives and personal circumstances.

Learn more about our Islamic investment products here.

Read more
20Aug

Preparing for retirement in uncertain times

August 20, 2020 hejazfs Investments, Lifestyle 70

We know that preparing for retirement can be difficult especially during uncertain times. This article will suggest ways you can preserve your wealth so that your retirement plan is on track. As most long-term investors know, investment markets have their ups and downs. The downs are usually associated with periods of uncertainty, perhaps due to political or economic factors, or even natural disasters. Uncertainty leads to volatility – more extreme movements in asset prices – which can have a big impact on portfolio values. This can be of particular concern if you are close to retirement and preparing for your last payday. So, what can you do about it?  

 

If you are building wealth in preparation for retirement in wobbly times, there are some options: 

  1. Save more. The 9.5% Super Guarantee will not be enough. Savings of at least 15% of salary over your working life are required to produce a sufficiently large retirement investment.  
  2. Spend less now and in retirement. Review your budget and review your plans about how you will live in retirement. 
  3. Work longer. Put off retirement until later; maybe consider working part-time in the first few years of “retirement”. 
  4. Seek higher investment returns. 
  5. Implement a gearing strategy to accelerate returns. 

 

This last solution will involve taking on more risk. Investors have always accepted that the higher the return, the higher the risk. It is often easier to see the good investment opportunities after the event, but the challenge is to identify where consistent higher returns can be found.  

 

Don’t abandon shares 

Over the long term, shares have produced higher returns with greater volatility. The returns shares provide is called the “equity risk premium” – the reward for taking on the extra risk. When investment volatility is high, shares tend to be the hardest hit. But while it is tempting to sell shares in a falling market, this robs investors of the opportunity to ride the upswing when markets recover. 

 

Allocate more to riskier assets 

Fund managers have traditionally held a significant proportion of investments in blue chip company shares. Whilst they tend to pay consistent dividends, there may be other opportunities for faster growth. These include smaller companies (or small caps), unlisted shares (private companies) and overseas shares in less developed countries (emerging markets). 

Apart from shares, higher yielding debt instruments offer the potential for even higher returns but at higher risk. 

The key to investing in these areas is good research – identifying sound opportunities and eliminating those with unacceptable levels of risk. Of course, the supply of “good quality, relatively safe” investment opportunities may appear to be limited when things are uncertain. Some fund managers offer products specialising in a wide variety of assets.  

 

Active asset management 

Good investment management requires talented people and sophisticated systems and strategies. Organisations with these attributes have a better chance of identifying under- and over-priced securities and markets. By moving money between countries, currencies, sectors, and asset classes, these managers aim to produce higher returns. Funds managed according to an “absolute return” philosophy is an example of where managers aim to produce above average returns in rising and falling markets. 

 

Implement a gearing strategy 

Borrowing (or gearing) gives you a larger sum of money to invest. This magnifies any growth you achieve on your investments especially over the long term. Careful thought should be given regarding the method of gearing as some strategies may be more suitable to your particular circumstances than others. You should always bear in mind that gearing may not only increase your gains, it can also magnify any losses.  

 

Preparing for retirement in uncertain times can be difficult. Before you make any rash decisions, talk to your financial adviser first to develop a plan specifically to suit your needs.

 

Learn more about our range of Islamic financial products here.

Read more
    123
Hejaz Financial Services
1300 043 529
[email protected]

Products & Services

Islamic Super
Global Ethical Fund
Ethical Income Fund
Islamic Finance
Islamic Pension

Help & Support

Contact us
Apply online
Login
Documents & forms
Book an appointment

Licencing

ABN: 44 161 857 478 ACN: 161 857 478 Authorised Rep of InterPrac Financial Planning Pty Ltd (AFSL 246638). Australian Credit Licence 480542. Tax agent number 25214708.

Hejaz Financial Services © 2020 / All Rights Reserved

Legal Notices
Privacy Policy
Refer a Friend
F.A.Q
Contact Us
Apply Online
Call us: 1300 043 529