‘High risk, high return’ is a commonly applicable phrase in the world of investment or asset management. What makes a risk high is really a subjective issue and for many people depositing their money into some management other than the traditional bank is a high enough risk. Private banking is sometimes the term applied to having your savings in the management of an individual assets manager or advisor, or a company specializing in assets management services. When you consider that there is always a chance of losing a great deal because of an unforeseen event or development in the market, or simply through bad management, the risk is high indeed. People will be looking for individuals and companies who have the reputation and history of performing well, not failing to create real output with one’s savings and assets and known to be capable of reliable and accurate market assessment.
Still, a lot of people, wealthy or not, dream of high returns that can never be hoped for from the stable and conventional banks. They want to create substantial sums of money from their regular savings or capital without the venture of setting up a business, investing the necessary time and energy or employing personnel to sell more goods or services; all of which amounts to investment at high risk, after all.
When people experience a high risk without the expected return as the result of a failed management of their property, what they might come to opt for is stability. A profit that is still higher than one offered by the conventional banks, nothing spectacular but higher, and at the same time quite safe from drastic losses.
One form of investment in Australia can be described as a blend of private management and government regulation: it is the Australian superannuation, the most popular form of which is the Self managed superannuation fund. The superannuation is basically like an annuity but managed by employers or employees themselves, the contribution to which is made mandatory by the government. Apart from the compulsory proportion of salaries that have to be put into the fund, voluntary contribution is also encouraged.
The main motivation for the legislation and effective application of this kind of superannuation is to generate a systematic way to prepare for working people’s old age. Various governmental agencies such as the Australian Taxation Office(ATO), the Australian Prudential Regulation Authority(APRA), the Australian Securities and Investments Commission(ASIC) and the Superannuation Complaints Tribunal(SCT) keeps watch on whether a superannuation fund complies with the law, by activities such as making sure fund members are provided for properly, dealing with taxation issues or offering arbitration in cases of conflict. The fact that most superannuation funds are the self-managed super funds suggests that people wish to have access to more direct information and right to choose investment options, although they have the rights to change funds when not satisfied with their current ones with other types of superannuation such as the industry funds or wholesale master trusts.