3 things to consider when start an investment
When consider investing there are three things you need to study
Return Putting money in the bank will give you 2%. Investing in properties or shares may generate 10%. Your superannuation statement may show you their average return for last 7 years is 8.9% etc. In finance, there is a thing called Rule of 72, which means if the annual return of the investment is 10%, it will take 7.2 years to double your money and if the return is 7.2% it will then take 10 years for the initial investment to duplicate itself.
Risk Any investment involves certain degree of risk. Leaving the money in the bank has no risk, but the return will not catch up the inflation. Properties and shares may give you higher return but they quite possibly generate negative returns in some years. If you need to access the money in short term the risk will be massive by investing such assets, however if you have long term plan, the market will come back one day, and the average return can be much higher than other defensive assets. So time plays a significant role in the risk equation.
Tax Same investment if put in different tax environment can hugely affect your net return. For example, the tax for investment in the superannuation is generally no more than 15%. If put under your personal name, any profit will be added onto your personal income and liable for income tax based on your personal tax rate. By using investment bond you will pay no more than 30% tax on the returns. Taking compound return into considerations the money you end up in your hands can be significantly impacted by the tax that you have paid.