Each year many of us make a New Year’s resolution to spend less and save more for our future, but without a plan our good intentions may not amount to much.
Let’s look at some basic rules for building and preserving your wealth in the years ahead.
Pay yourself first
Make sure that you regularly set aside some of your income before you’re tempted to spend it. Before long you’ll have enough to consider a range of investment options.
Invest for growth
Over the longer term, growth investments such as shares should give you a better overall return than cash-type investments, but of course you have to select good value investments and expect some volatility.
Too good to be true
Steer clear of investments with unrealistically high returns and most of the highly tax-driven investments that you may read about as we approach 30 June – they’re often riskier than they appear.
Invest tax effectively
Remember that money invested in Australian shares or managed share funds can earn you imputation or franking credits. These effectively reduce your tax payable, leaving you with more after-tax income. With good advice, you could also consider borrowing modestly for investment.
Make the most of super
Superannuation is still the most tax-effective form of retirement saving for most people. Because of the lower rate of tax, your superannuation investments generally grow faster than non-super investments.
Spread your risk
Don’t put all your eggs into the one basket – maintain a balanced approach to investment. It is generally a good idea to spread your investments across a number of different asset classes such as shares and property, fixed interest and cash. Often if one asset class performs poorly, another may perform strongly. A diversified approach can keep your investments growing steadily.
Financial advice makes a difference
Bridges has been providing professional financial planning services to credit union and building society members since 1985. A Bridges financial planner can work with you to develop a financial strategy for the year ahead that suits your circumstances. Call Hume on 02 6051 3233 to make an appointment with a Bridges financial planner. The initial consultation is complimentary and obligation-free.
Call Hume on 02 6051 3233 to make a complimentary and obligation-free initial appointment with a Bridges financial planner.
Bridges Financial Services Pty Limited (Bridges). ABN 60 003 474 977. ASX Participant. AFSL No 240837. This is general advice only and does not take into account your objectives, financial situation and needs. Before acting on this advice, you should consult a financial planner. In referring members to Bridges, Hume Bank Limited (ABN 85 051 868 556 AFSL & Australian Credit Licence No. 244248) does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives.