The Benefits of Diversification When Investing

In investment strategy the term diversification means to spread your funds across various financial instruments. This is a common approach to manage the risk levels of capital loss to your investment portfolio and reach your investment goals.

As different asset classes and segments perform well at different times, this fractional investment model is one of the key principles to ensure you won’t lose all your money if one sector or asset class fails to perform at a certain time – If you put all your money in stocks for example, you risk losing everything if the stock market crashes. Effectively, by not “putting all your eggs in the same basket” you won’t rely upon a single investment for all of your returns. The tactic simply aims to maximise returns safely by investing in assets that would react differently to a market event.

Diversification strategies

You can achieve a well-diversified portfolio by investing:

  • across a range of various asset classes (cash, fixed interest, domestic and international shares);
  • across different fund managers if investing in managed funds;
  • in different industry sectors or companies (e.g., aviation and railway).

There are many benefits to portfolio diversification when trying to mitigate the risks of investment, some which include:

Lowering the risks

An unsystematic investment risk refers to a risk specific to a company, industry, market, economy, or country. During times of increased market volatility within a specific market, your share portfolio may experience loss of value. However, if you hold investments in other types of asset or industry sectors that may perform better from the same market event, these returns can help smooth out the negative effects of your overall investment portfolio value.

For example, if you have invested part of your portfolio in airline stocks and the aviation industry is affected negatively, causing a drop in your portfolio value, you can counteract this downturn by also investing in another industry. If you’re lucky enough to have invested in a mix of stocks and holding a few railway stocks as well, there is a very good chance that these stock prices would rise as commuters would turn to a different way of traveling.

By this example of diversification, the right combination of different industry segment or companies will reduce your portfolio’s sensitivity to adverse events to the market.

Generating returns, safely

It is to be understood that when investing heavily in instruments offering high return, you end up buying at a higher price. This means that, even though your investment would yield a significantly higher return if the market conditions were favourable, when judged on a risk-return basis the risk is as high as the return.

Therefore, diversifying your assets is often considered a core strategy in generating returns over time. This strategy may come with lower rewards because the risk is mitigated, but is effectively generating a bigger return in the long run for the same reason. Investments don’t always perform as expected, so by diversifying assets you are not merely relying upon one source for income.

Safeguarding your capital

All investors are different, and not everyone is ready to put all their funds a risk for a high return. Investors who are only years away from retirement or people who are new to investment are usually prone to follow a more safe and stable investment strategy.

With this tactic more novice investors are allowed to achieve their investment plans while maintaining the risk at a minimum. It is also a method of playing safe during times of market volatility. Discussions with a financial adviser may be of great assistance when exploring the risks in your investment strategy and the various diversification requirements as well as cash flow requirements.

Fractional Property Investing with DomaCom

The DomaCom Fund is an ASIC registered Managed Investment Scheme (MIS) that allows you to invest in one or more properties of your choice via a fractional investment structure. Investors can select any Australian properties to invest in. These include residential, commercial, rural, retail, industrial and resort/leisure property lists.

Our unique platform allows investors to diversify their portfolio by investing across a range of assets property types around Australia, from agricultural and rural to residential and commercial properties, rather than investing in a single asset class.

View some of our current property crowdfunding campaigns.

If you are not sure which investment option can work for you, contact us today if you need more information about our options.

The Affordable Property Accelerator (RPA) program

Pitt Street Research recently reported on DomaCom’s continuing progress on new product releases.  

DomaCom recently revealed a new partnership with BlueCHP, a community housing provider specialising in the development and retention of affordable housing. The union is based on DCL’s Rental Property Accelerator product.

The DomaCom Affordable Property Accelerator (RPA) program worth $250m, formerly known as rent-to-own, will be used to allow investors to invest in affordable housing properties that will be managed by BlueCHP.

Continue reading “The Affordable Property Accelerator (RPA) program”

DomaCom develops key product to drive future revenue

The September quarter saw four new core product developed by DomaCom, all with a focus on the AustAgri transaction; Rental Property Accelerator, Essential Worker, Equity Mortgage, and Senior Equity Release.

Chief executive officer Arthur Naoumidis said: “The September quarter has positioned the company with several very prospective transactions that could transform the outlook of the company going forward.

“If successful, the AustAgri transaction will add $300 FUM and significant cash flow which would place the company in a stable cash position and in sight of being cash flow positive.

Continue reading “DomaCom develops key product to drive future revenue”

Downsizer Contributions Explained

We all look forward to a comfortable and secure retirement. However, building a financial cushion that will fund our golden years is not easy for everyone. Planning for your retirement begins with thinking about your retirement goals and what you must do to meet them.

In Australia, seniors who want to increase their retirement savings can now make a tax-free contribution to their super using the money from the sale of their main residence. They can do this regardless of caps and restrictions that otherwise apply. Take a look at the potential benefits, eligibility rules, and other things that individuals need to be informed of if they plan to make downsizer contributions.

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Developers Rental Property Accelerator Explained

Rental Property Accelerator is a model like no other, an opportunity for investors and tenants to share in a property and leverage off DomaCom’s unique fractional investment platform, a modern form of syndication where ownership can be shared to present a pathway to ownership for renters and secure tenancy for investors.

Developer Opportunities

For developers, the Rental Property Accelerator model can lead to multiple sales to a demographic that is struggling to get into the property market, build confidence and facilitate intergenerational investment opportunities within families.

Continue reading “Developers Rental Property Accelerator Explained”

Seniors Equity Release (SER) Explained

Seniors, this news is for you: DomaCom recently released a new scheme that will be beneficial to all Australians aged 65 and older. It’s called the Seniors Equity Release (SER) and is the first of its kind in the country.

What is SER?

SER is a financial product that allows seniors to sell a percentage of their properties’ equity to investors through DomaCom and get a lump sum or a regular payment plan in return. However, they will still be able to retain occupancy and the title for the properties.

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April 2019

News Updates

DomaCom has had a very busy 8 months building on developments set in train months and years earlier and sits on the cusp of some exciting projects and advancements.

Statistics

  • 62 property deals completed.
  • $50m FUM.
  • Property types include: residential, commercial, rural/farmland, land banking.
  • 1,089 investor accounts.
  • Minimum residential investment $2,500 (other non-residential projects may have higher minimums).
  • Average investment $43,000.

Continue reading “DomaCom Newsletter – Issue 18”

June 2018

News Updates

Statistics*

  • 51 property deals completed
  • Property types incl. residential, commercial, renewable energy, farmland, land banking
  • 1,364 investor accounts
  • 863 investors
  • Minimum residential investment $2,500 (some projects may have higher minimums)
  • Average investment $35,000

Continue reading “DomaCom Newsletter – Issue 17”

December 2017

Use crowdfunding to invest in Top Australian Suburbs Residential Strategy

DomaCom provides retail investors, advisers and their clients the edge when it comes to investing in the best residential property in Australia. Blending institutional grade property research with individual property buyer’s agents to select properties for investors, DomaCom put its clients directly in the driver’s seat. DomaCom offers the ability to invest in residential property in the city of your choice through our Top Australian Suburbs Strategy crowdfunding campaigns.

Continue reading “DomaCom Newsletter – Issue 16”

July 2017

July 2017 – DomaCom is pleased to announce that we have commenced the following regional public crowdfunding campaigns that may be of interest to your clients. Akuna, Cobram VIC Akuna is developing a portfolio of resort-style residential communities in regional Victoria for the over 55’s, commencing with a ‘greenfield’ site in Cobram on the Murray River.

Continue reading “DomaCom Newsletter – Issue 15”