Types of Investors

Types of Investors

Defensive investments

Defensive investments aim to provide regular income. They generally provide stable values and investment returns over short periods. The downside of this security is that defensive investments do not usually grow in capital value, and returns are generally lower than those of growth investments over the medium to long term.

• Cash. ‘Cash investments’ generally refers to investments in bank bills and similar securities that provide a stable, low-risk income in the form of regular interest payments. There is no minimum investment timeframe for this asset class.
• Fixed interest. These include term deposits, debentures, mortgages, and government and corporate bonds. Returns are usually in the form of regular interest payments for an agreed period of time. Fixed interest investments are generally appropriate if you have an investment timeframe of one to three years.

Growth investments

As well as income, growth investments aim to increase the value of the capital invested. While investment returns are likely to fluctuate over the short term as markets and economies change, growth investments have the potential to produce higher returns over the long term than defensive investments.

• Shares. A share represents part ownership of a company. Shares are generally bought and sold on a stock exchange. Returns usually include capital growth and income from dividends. You can choose to invest in Australian shares, international shares or a mix of both. The minimum suggested invested timeframe for shares is five to seven years.
• Property. You can invest in property directly (e.g. when you buy a house or commercial premises such as a shop) or indirectly (e.g. by purchasing units in a property trust listed on a stock exchange). This asset class includes residential, commercial, retail, hotel and industrial property. Property is usually considered a medium-term investment, with a timeframe of three to five years.

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