# Novice With Large Sum Of Cash



## Philo Beddoe (16 May 2014)

Say I have a sum of cash (around 400k) sitting in a term deposit that is about to mature at only 3.25%

Could anyone recommend some alternative options I could look at that would give me better returns?

It would need to be uncomplicated because I am a COMPLETE novice.

I don't want to buy a property or attempt and choose individual shares etc...

I am thinking some type of passively managed property fund?

Any ideas?


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## So_Cynical (16 May 2014)

Philo Beddoe said:


> Novice With Large Sum Of Cash
> 
> Any ideas?




Send it to me immediately!


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## Philo Beddoe (16 May 2014)

So_Cynical said:


> Send it to me immediately!




post your residential address on this thread and I will send it to you  maybe


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## So_Cynical (16 May 2014)

Ok so here is one idea that should cover you both in a bull and bear market, the Watermark Market Neutral Fund Limited, they hold both long and short positions and are active stock pickers while still spreading their bets, regular dividends and a somewhat certain level of safety.

http://www.wfunds.com.au/fundprofiles/watermark-fund-overview.aspx

ASX exchange tradable (buy and sell through an online broker) ticker code WMK

Disclaimer: not a recommendation or advise, just an idea...i do hold some shares in their other ASX traded fund but have no association with them.


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## Faramir (16 May 2014)

Minimum Effort = Minimum Returns (normally)

Unfortunately, you will have to do some work. You have to learn how to evaluate Fund Managers and even shares.

(You can always speculate and you might strike it lucky. You can always go to a casino and get really lucky.)

Keep some cash for safety. Low returns but very safe compared to other types of investment. Think long term and try to find time to educate yourself. If you are struggling for time (like me), just read a bit at a time. You don't have to read every post nor understand everyone's opinion. Read the financial section of newspapers whenever it offers 'educational' sections.

I am also a naive beginner but I have a lot less than you. I was going to throw everything into shares but instead I have only brought two shares with less than 20% of my savings used.

I made a mistake using a Fund Manager 7 years ago (stay away from MLC and other bank type of institution - that is my opinion)

With that amount of money, I guess every Fund Manager and Financial Advisor will say anything to get their hands on that money. You might want passive but you need to spend some time monitoring it so that you do not get ripped off.

Even if the Fund Manager performs, their fees will undo their gains.

Well I am a beginner, I guess others know much more than me. I still feel that you need to do a bit of study and take some responsibility of your Finances rather than hand it over to someone else who will charge an arm and a leg to 'look' at your money. Maybe one day I might learn to trust fund managers again. Until that time, anyone else can tell me that I am a beginner and I should trust them now.


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## Faramir (16 May 2014)

I lied in my above post. My Super is in an Industry Fund. Super is still a form of managed fund even though we can't touch it until age whatever the government of the day decides. I do not have enough funds nor time to justify a SMSF. I am so happy with my fund. WAY better than MLC. I read a newspaper article of Super about 2-3 years ago, become angry at the fees charged. Studied Selecting Super website and made the switch. Here I want to emphasis that a bit of reading and investigating helped me with my Super. I am suggesting that doing the same will help you with your savings.


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## Faramir (16 May 2014)

Sorry if this is not a Managed Property Fund but I found this in Australian Financial Review on Wednesday 16 April 2014, Page 29 under Markets section. Don't ask me why I kept this article. Title is:
"Fund managers trailed in first quarter" it is a Mercer survey of equities funds

Hope the pic comes out cos it is my first time uploading a pic.


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## DeepState (16 May 2014)

Faramir said:


> I lied in my above post. My Super is in an Industry Fund. Super is still a form of managed fund even though we can't touch it until age whatever the government of the day decides. I do not have enough funds nor time to justify a SMSF. I am so happy with my fund. WAY better than MLC. I read a newspaper article of Super about 2-3 years ago, become angry at the fees charged. Studied Selecting Super website and made the switch. Here I want to emphasis that a bit of reading and investigating helped me with my Super. I am suggesting that doing the same will help you with your savings.




I imagine that your $400k is non-super.  Nonetheless you can invest in the Public Offer methods which, I think, give you exposure to the underlying investments without the regulations associated with Super.  For a major industry fund with maybe north of $20bn under management, you will get a diverse exposure to global shares, property, infrastructure, a bunch of hedge funds, bonds, credit, timber, commodities, private equity, currency...even art.  They are super cheap because of their scale.  They are one stop shops too.  Walk in, have a chat about what is the right option for you with one of their planners, fill in a form, transfer the dough...get on with your life.


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## Faramir (16 May 2014)

1): Regal Australian Long Short Equity 33.3%
2): Ausbil Active Extension 27.1%
3): Bennelong Concentrated Equities 26.1%
4): CBG Australian Equities 25.3%
5): Hyperion Australian Growth 24.1%

12 months up to 31 March 2014

136): Clime Australian Value Fund: I thought Clime had a very good reputation. It shows how much I really know????? Surely Clime must have other products that performed well????

Next year, I expect the list to be different. Can someone please find the Property Fund Manager Ranking equivalent?


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## DeepState (16 May 2014)

Faramir said:


> 1): Regal Australian Long Short Equity 33.3%
> 2): Ausbil Active Extension 27.1%
> 3): Bennelong Concentrated Equities 26.1%
> 4): CBG Australian Equities 25.3%
> ...




These surveys come with the warning: Past performance is not a reliable indicator of future performance.

Do not pick funds on the basis of past performance.  There is only weak persistence at the extremes. Everything else is a mash.

Two of the five you have listed are actually hedge funds.

You can get survey data by paying for it.  In the direct property space the majors are AMP, ISPT and Investa.  All the others are side players.  You can probably get their data directly and save your subscription fee.


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## luutzu (17 May 2014)

Philo Beddoe said:


> Say I have a sum of cash (around 400k) sitting in a term deposit that is about to mature at only 3.25%
> 
> Could anyone recommend some alternative options I could look at that would give me better returns?
> 
> ...





Just wondering, why aren't you managing your own fund?
Not interested, got family and friends and other important things to do than just money?

All good reasons to me, just curious.


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## Philo Beddoe (17 May 2014)

luutzu said:


> Just wondering, why aren't you managing your own fund?
> Not interested, got family and friends and other important things to do than just money?
> 
> All good reasons to me, just curious.




I would say that I have no confidence because I have no knowledge and I have no knowledge because I have no interest.


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## prawn_86 (17 May 2014)

Philo Beddoe said:


> I would say that I have no confidence because I have no knowledge and I have no knowledge because *I have no interest.*




Sounds like every brokers dream, they will happily milk their fees if you don't care.

If you have no interest and don't want to lose any of it then you should probably just leave it in term deposits.

Please also note that ASF members are legally not allowed to give financial advice, anything here is purely opinions only and the advice is not specific to your needs


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## So_Cynical (17 May 2014)

Philo Beddoe said:


> I would say that I have no confidence because I have no knowledge and I have no knowledge* because I have no interest.*




If you genuinely have no interest then put your funds in a bank and be done with it....but you want to beat the banks and so do have an interest.

Why don't you cut the crap and get on with it?


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## Smurf1976 (17 May 2014)

Investing in a selection of managed funds is one option that comes to mind.

Eg invest say $50K each into 5 different diversified funds with different fund managers (which hold shares, property and so on), put another $50K into an ETF (Exchange Traded Fund) that tracks the ASX and leave the other $100K in the bank. 

That approach removes the risk that one individual fund manager gets it wrong and causes you a big loss. Obviously it also means that you won't benefit as much if one individual fund does extremely well, but it should give you a more consistent return.

There's not a lot of effort required beyond choosing the funds in the first place then filling out your tax return. But they'll send you all the relevant info at tax time, you'll just have to add them up and put the right numbers in the boxes to keep the Tax Office happy. Or get an accountant to do it for you. 

That's just my opinion of course - the law states that only a qualified person can give "financial advice" as such.


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## VSntchr (17 May 2014)

My advice to anyone who is a self-declared noobie, is to invest into a *low-cost index fund. *

However, this is not advice and merely a suggestion to check out this option. It removes some of the negatives associated with managed funds and gives a simple option to achieve exposure to the expected long-run historical returns of the given index which the investment tracks.


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## Faramir (17 May 2014)

Philo Beddoe said:


> because I have no interest.




Should I be jealous of your situation? Every $1000, $100 or $10 I saved required much effort and sacrifice. I am currently paying the penalty of having no interest twenty years ago. Not sure you have ever experienced financial hardship or unemployment for extended periods or running a business where cash flows suddenly drys up. Not sure why you have no interest. Yes there are lots of more interesting things in life but isn't your financial welfare somewhere in your list of priorities.

You must have a bit of interest to log in and ask questions here because here we openly admit that we are beginners, experts, liars or have massive egos. (My disclaimer is that I am a beginner.) You can always ask your mates who wil use you to get access to that money.

Hasn't your local bank teller openly throw out suggestions like "invest in this product", etc? They always ask me with the tiny amount I have. You should have stacks of advertising mail piling your letterbox with their ideas.

Here are some suggestions:
Zero Effort/interest:
1): leave in term deposit or cash management account. At least you will only devalue your savings at the rate of inflation

A bit more than zero effort/interest:
2): give it to one of us. It will require a bit of effort to contact us, a few messages, emails, phone, etc and you will find we will run away.  There is only a 0.000000000001% that we would manage it with your best interest at heart 

No effort/interest in finances but lots of effort in your personal life:
3): Hope your existing partner or find a partner that has very good financial management skills and has lots of interest in this topic. You might risk finding a gold digger. (I sometimes wish I could become one. My partner has very bad money management  ) The only effort required is chatting someone up and hope that you can read people well. The next part is to keep your partner happy. Let's hope your relationship skills is way better than your financial knowledge.

Still not much effort/interest:
4): the first advertising mail, person, etc who approaches you with an offer: give them the whole lot. They may manage it well, they may work for the next Storm Financial group or Ostrich Farm or use your money to fund OneTel or ABC Learning. You don't have to do anything but hope that they are honest. Guarantee to pay lots of fees but you won't have any idea of their performance. If they are good, they want want to see you once per year just to say how wonderful they are.

Any more suggestions I am going to offer will required a bit more effort. You took the time to log on here. So it should be minimal effort to at least learn what are the correct questions to ask a Fund Manager and spend a bit of time reading a PDS. Or searching for sites that rate Fund Managers

Personally I would take Suggestion 3). I wish I could be a Gold Digger but my chatting up skills and relationship skills is much worst than my financial skills 

If you really want to put in no effort, expect minimum returns if you want to protect your savings. Otherwise gamble it either at the casino or with some Storm Financial Planner if you still want to invest no effort/interest.

Sorry if this does not sit well with you but you need to get an interest. You need to gain some knowledge, even if it is needed to monitor your faithful partner. At least you time on your side. No need to rush your decisions and seek lots of opinions while trying to learn yourself.

Hopefully we have tried to be honest despite not saying what is nice and comfortable like: invest in XYZ Fund Manager cos my cousin made a killing with them.


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## Julia (17 May 2014)

Faramir has provided a pretty accurate summary imo.  

The OP's attitude of not wanting to bother acquiring some financial literacy is unbelievably widespread.

I've remarked before on my own circle of friends, all tertiary educated, a couple with PhDs, all except one having nothing much in the way of savings other than owning their homes, who all their lives have declined to be interested in even the most basic investing.

Now, of course, they all complain about their lack of financial freedom in retirement, wish they could afford private health cover, get a car that doesn't break down regularly etc.

No fund manager anywhere will have your financial interests at heart in the way you will yourself if you just take the time and energy  to acquire some education.   There is a huge amount of free info on the web.  You could start with the basic education modules on the asx website.
http://www.asx.com.au/education/shares-education.htm


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## Smurf1976 (17 May 2014)

Investing is little different to anything else in life. To get what you want requires some knowledge, and getting that knowledge requires some research.

Even with something like taking a holiday, some prior research is necessary to get what you want. Walk into any travel agent, tell them you want to do a 1 month trip to the US and they'll quite happily take your money and have you on your way to LA, San Francisco, Las Vegas, New York City and possibly Washington DC with a side trip to the Grand Canyon along the way. In other words, they'll simply pick from the mainstream, well known US destinations until they've got your requested month's worth of activities and that's what you'll get. No problems if those are the things you wanted to do, there's nothing wrong with visiting any of those places as a tourist, but it would be a real letdown if you hate big cities, failed to mention this point, and had no idea what you actually wanted to do or see whilst on holiday.

It's the same with everything from buying a house to renting a DVD. If you have no idea what you want, and aren't going to do any research, then you're basically gambling. Perhaps not an issue with the DVD, worst case you just wasted a few $ to watch a film you didn't like, but a major problem when it comes to anything involving lots of money such as houses, cars, trips to the other side of the world and of course investing.

So I'd be doing enough research to at least understand what is going on and the associated risks and benefits. Even if you're not going to pick your own shares, at least learn about asset classes, how funds operate and so on before investing in them.


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## Philo Beddoe (17 May 2014)

Thankyou. Every single person that has bothered to respond has made valid points. 

I do intend to improve my knowledge on the subject and this thread has made me feel kinda of embarrassed about how slack I have been in the past.

I will return to this forum when I am in a position to ask more educated questions.


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## luutzu (17 May 2014)

Smurf,
you still rent DVDs? People still rent movies and sign up to pay TV? 

---

Like most things, it's relatively easy to know the basics of stock investments... but to really do well, a little better than knowing the basics... will take a lot of work - work to both know what you are doing, and doing it often enough that you are likely to find the rare opportunities to make it all worthwhile.

So unless you have the interests, or a large enough savings to make it interesting, best is to put in an index fund(s) and grow with the general economy over time... which averages 7 to 9% p.a. over the long term (a decade or more).

But as some have said above, you shouldn't completely just hand the money to a manager and hope for the best... a little research on what they do, how have they been doing, what are they charging etc.. will still be required.

I mean the Maddoff ponzi goes on for over a decade, with investors (both retail and professional managers/bankers, from around the world) losing $65 Billion [?] when all it took to know it's a ponzi scheme (according to the guys that discover it and raise alarms bell no one at the SEC do anything about)... was a few hours of basic calculations on the reported performance.

So either diversify across a couple/few unrelated index funds or follow one of those "In God we trust, everyone else pay cash"... "God help those who help themselves" kind of advice.

It's not the best position to be in, but then it's not half bad either.


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## Judd (21 May 2014)

Philo Beddoe said:


> Say I have a sum of cash (around 400k) sitting in a term deposit that is about to mature at only 3.25%
> 
> Could anyone recommend some alternative options I could look at that would give me better returns?
> 
> ...




I am Princess Nagara from Nigeria.  I can help you.

Just don't tell anyone on any forum in any shape of form you have money.  Geez.


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## trainspotter (21 May 2014)

Surely this is a set up right? My opinion is try the Martingale System at your nearest casino and put 100k on Black 13 :

{Please note the tongue firmly implanted in cheek}


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## Faramir (21 May 2014)

Hi Jude and Trainspotter.

Anyone can be a beginner and very naive. Lots of people get conned constantly. At least the OP come here to ask. Imagine if he asked a 'friend' or a Financial Planner working for one of those dud companies.

I thought there were no dumb questions in the Beginners Lounge. Although most of us were shaking our heads and expressed our disbelief at first. We stated our opinions and the OP decided that he will educate himself more.

One day when I have a question, I hope either of you can give me some insights, valuable opinions or something that will contribute to my learning (which is only at its beginning stage.)

I know how you feel about the original post. I felt the same originally but at least we tried to help the OP.

The best thing about this thread is that any future people who are fortunate enough to find themselves with excess cash will realise that they need to educate themselves. Unfortunately I am at the other end, I am trying hard to save. One day, I hope I can ask the same question as well.


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## CanOz (21 May 2014)

Yeah, agree with Faramir that there are no dumb questions and indeed the person seems to be reaching out for some help on where to start. 

400k is not a large sum of money anymore, heck neither is a million, but still significant. 

The best advice given is to start to do some research, educate oneself. You may not have an interest in it, but i assume one has enough interest to ask for for help. Its your money, manage it.


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## Wysiwyg (21 May 2014)

Faramir said:


> Unfortunately I am at the other end, I am trying hard to save. *One day, I hope I can ask* *the same question as well*.



Now that is being a silly billy. You have the goal set so you prepare before, not after. Gee whiz.


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## trainspotter (21 May 2014)

Yeah sure Faramir to you it is not a dumb question. I never said it was. As we are not allowed to give advice in here and can express an opine only on the subject matter I find it very difficult to come to terms with "naive" people "suddenly" coming into X amounts of large sums of cash and then request advice in a stock thread. 

The Martingale system I suggested is a system of strategy nonetheless. Double up after every loss. The original post asked for an "easy" way with not much hands on practice. Could not be any easier then casino money really now can it? Red or black on roulette with a 50% chance of getting it right. Apply the same strategy to Forex trading (a lot harder admittedly) and the results "could" be the same.

If you play Martingale, you start by betting the lowest amount on the colour you choose. Let's say, that the lowest bet is $1. If you win, you win $1, because you get the double for hitting the right color at roulette. If you lose, you are $1 in the red. This loss is exactly what the Martingale system should deal with. If you lost $1, in this method, you bet $2 in the next round on the same colour. If you win in this round, you will get $2, which will compensate for the loss in the last round and you will also get another $1. If you lose in this round too, you will be losing $3 which doesn't matter, because in the next round you bet $4 and if you win, you will be again $1 in the black. You keep doubling your bet until you win and get $1. From then, you will start over with $1 bet and follow the same pattern, until you guess the colour right again and get another dollar. Ideally, a player can get by on small steps to (hopefully) large winnings.

Unless there is a terrific run on either colour then you walk away after 10 throwdowns with a loss of $1023 in total.


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## MichaelD (21 May 2014)

trainspotter said:


> Red or black on roulette with a 50% chance of getting it right.



It's not 50%. It's less than 50% because of 0 and/or 00. Therein lies the casino's edge.


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## trainspotter (21 May 2014)

MichaelD said:


> It's not 50%. It's less than 50% because of 0 and/or 00. Therein lies the casino's edge.




OH DEAR GOD !! What are the odds of hitting 0 or 00 ?? 2.77777777777778% IF you were playing doubles that is !! If you read my post we are playing the Martingale system which is either red or black


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## So_Cynical (21 May 2014)

MichaelD said:


> It's not 50%. It's less than 50% because of 0 and/or 00. Therein lies the casino's edge.




Single 0 roulette house edge on black/red/odd/even/high/low bets is 2.70%.


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## trainspotter (21 May 2014)

So_Cynical said:


> Single 0 roulette house edge on black/red/odd/even/high/low bets is 2.70%.




Depends if it is a French or American roulette wheel but thanks for agreeing with me So_Cynical.


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## So_Cynical (21 May 2014)

trainspotter said:


> Depends if it is a French or American roulette wheel but thanks for agreeing with me So_Cynical.




An extra 0 doubles the house edge, i have never actually seen a double 0 wheel...likely we will never agree on anything again, and im cool with that.


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## trainspotter (21 May 2014)

So_Cynical said:


> An extra 0 doubles the house edge, i have never actually seen a double 0 wheel...likely we will never agree on anything again, and im cool with that.




In American roulette, there is a second green pocket marked 00 ... SO yes the house edge would double. Agree to disagree duly noted :frown:


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## Faramir (21 May 2014)

Wysiwyg said:


> Now that is being a silly billy. You have the goal set so you prepare before, not after. Gee whiz.




Hi Wysiwyg
Yes I do have goals. Yes I still want to asks questions. It will give me an opportunity to review what path I am taking. Sorry if I said it the wrong way, open for misinterpretation. I should have said I would like to ask questions that may be similar. As I save, hopefully I am also learning more as well.


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## MichaelD (21 May 2014)

trainspotter said:


> OH DEAR GOD !! What are the odds of hitting 0 or 00 ?? 2.77777777777778% IF you were playing doubles that is !! If you read my post we are playing the Martingale system which is either red or black



Martingale, even with an infinite pot of money, on a roulette wheel is always going to lose in the long run because of the casino's edge inherent in the 0. It's a negative expectancy system, as are all casino games.


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## sydbod (21 July 2014)

Sorry folks, but most of the information given in this thread is totally useless to a novice.
The best information given currently is to go out and learn ....... no mention of what is to be learnt, or from where one should learn.
Yes, I was in this situation many years ago and boy!!!! was that learning expensive, so I want to throw a few pointers on the table.
1) do you truly want dividend stock .... are you sure, or do you want some sort of mix based on your personal situation. If one has a good income, then capital appreciating stock tend to be a better situation (less tax until time to sell). If you require an income stream then YES dividend stock tend to be the better choice since one can get the advantage also of the franking credit especially when one is on a low taxable income level.
2) NEVER ... NEVEREVER take what is recommended and praised as good advice in the local press. They tend to overstate on the upside and understate what is on the downside. YES you do have to do a lot of research on the companies that you want to buy into. You want to look for things like the future outlook for the company, does it pay dividends and how much, what is the future growth potential of the company and its income, how stable is the market that that company works within. There are many sites on the Internet that give cut down versions of this information, but analysts reports are usually the best source of general information (at least from my experience)
3) if you do intend to be lazy, then at least try to follow investments that have a proven track record. Most self managed super funds tend to invest in basically only 10 shares. They just happen to be mainly dividend shares, and have a good success rate for investments for a long time. 4 are banks, 2 are consumer staples, 1 is a telecommunications company, and 3 are in the mainly mining area but some of these are a bit more diversified. Do a bit of lazy research to find out about these 10 companies and see what you think of them ....... NO, I will not tell you their names.

Hope this is a bit more help to the poster or future readers.


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## qldfrog (21 July 2014)

To try to help:
Someone mentionned ETF:
fair but this is usually seen as an exposure to the share markets (or a market)
If ETF, maybe go for a mix of ETF:
currency, gold/silver(maybe physical vs paper ETF), asx 20/200 , small caps ex ASX20; O/S markets: Asia,US,emerging countries, 
with that plus let's say 25% in TD, you should be cruising and always have a buffer;
I would maybe also scale the entries with such amount: averaging in 15% of target amount every second month
-> will reduce the risk of going in on the very bad day
REIT could also be a way to get relatively low risk 7% return (I said relatively  as GFC pointed to some nasty issues there)

Hope it helps; and there areno stupid question;
And DYOR: I can not provide advice, this is just what I would do


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