How to mitigate investment risk

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A decision to invest requires a conscious decision to spend a portion of available money on uncertain ventures, in anticipation of increasing available cash in the future. 

A common strategy to mitigate risk is to diversify the investments in a portfolio. It's a good idea to invest at least some of the money in assets that will grow over time and to spread the investments over different assets to avoid financial heartache in the future.

Here are some common area's of diversification:-

  • Rental property
  • Stocks and bonds
  • Business equipment lease contracts
  • Peer-to-peer lending
  • Real-estate crowdfunding or REITs
  • Cash and deposits

Business equipment lease contracts are one of the lessor known ways to diversify. However, they are easy to understand and tailor to the needs of a portfolio and provide a stable, relatively high return.  
They are often used to boost SMSF returns, pay off a mortgage faster, generate income from retirement capital, and/or to grow a savings portfolio faster.

For private investors, the following features are of interest:-

  • Ownership of the asset can be secured by the government's Personal Property Securities Register.
  • A fixed lease fee stipulated in the contract over a set contract period.
  • Lease fees can range from 10% to 15% of capital outlay per annum.
  • The asset can be subject to a 100% buy-back at the end of the contract, or;
    o periodic buy-back payments during the contract.
  • Contracts are with registered Australian companies under Australian law.
  • There are no ongoing fees or hidden costs.
  • All leased equipment is fully insured and maintained by the lessee.
  • The risk is clear and assessable.
  • Variable initial contract values allow investors to tailor the investment amount to the requirements of their portfolio.

Business equipment lease contracts are an innovative asset funding strategy for businesses and an innovative investment vehicle for private investors. They can find a place to benefit a diverse range of different type and value portfolios. As a tool for diversification, they fill a unique niche by providing relatively high fixed returns over a fixed period in a format that allows risk to be easily and confidently assessed.

For a limited time Your Investment Property is providing a free whitepaper download that explains how business equipment leases work, why they are used, and how you can profit from them.
Get your copy here.

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