If you’re thinking of investing in a Listed Investment Company (LIC) in Australia, you’re not alone. LICs have been around since the 1980s, and they are an increasingly popular choice for investors looking for a way to diversify their portfolios.
In this article, we’ll look at what makes a LIC attractive, how to invest in one, and why they might be right for your portfolio.
What Is A LIC?
LICs are listed investment companies. They are managed funds that invest in a range of assets, including shares, bonds, and property.
LICs have been around for many years but don’t get as much attention as other types of managed funds such as unit trusts or exchange-traded funds (ETFs). However, LICs may be a good option for you if you’re interested in investing for longer periods than other managed fund types allow and want to take advantage of the diversity that comes with investing across multiple asset classes.
Why Invest In A LIC?
There are many reasons why LICs are so valuable as an investment option, but here are some of the big ones:
- LICs are a good way to diversify your portfolio.
- LICs are a low-cost way to invest in the Australian share market.
- LICs are a good way to invest in the Australian property market.
- LICs are a good way to invest in the Australian fixed-interest market.
They give you access to the best stocks in the country without having to do any research or management yourself. – You don’t have to worry about how much money you’re making because someone else is doing all of that for you! Your money is spread out over many different stocks at once so that if one tank, it won’t take down all of your other investments as well.
How Do I Invest In A LIC?
Let’s take a look at how you can get involved in this exciting market, and what you need to know about LICs before investing with one.
The easiest way to invest in a listed company is through your online broker. This can be done by opening an account with the broker, who will have some information on the best types of LICs for your needs. For example, if you’re looking for income-based investments then that’s what they’ll show you first (and probably offer). If not, then it might be worth switching brokers until you find one that does offer what you need!
How Much Should I Invest?
It depends on your circumstances but generally speaking anywhere between $500-$10k per investment is ideal if possible (remembering that these are long-term investments). However don’t feel pressured into spending more than this amount if it doesn’t suit your situation – many people prefer keeping their funds liquid anyway which means they would rather put money into other types of assets like real estate instead!
hOW ARE LLCs Taxed?
Listed investment companies (LICs) are taxed in a similar way to unit trusts. The interest paid by LICs on their investments is subject to the same tax regime as other investments, such as shares and fixed interest. What this means is that income from these investments is taxed at your marginal rate and capital gains are taxed at the flat rate of 30%.
The main difference between investing in a LIC and investing directly in shares or funds is that you will receive franked dividends from a LIC. Franked dividends are those paid with franking credits attached, which means you get a refund for some of the tax already paid by your fund manager (in Australia). These franking credits can be used towards offsetting any income tax liability incurred from other sources during the year.
Conclusion
LICs are a great way to enter the world of investing, and with so many options available, it can be hard to know where to start. However, we hope that this article has given you an idea of what LICs are and why you might want one in your portfolio. We encourage you to do your research before investing in any fund—including Listed Investment Companies!
