| Top Seven Tips Towards Better Money Management |
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Here are some New Year resolutions (albeit) a bit late!1. Just get started.Investing can seem complicated, and it's not uncommon for people to be so put off by the apparent complexity that they don't get going until it's too late. Pick one thing you'd like to achieve with investing - such as organising a regular automatic payment from your pay office or bank account into a managed investment - then focus on making at least that one thing happen. Many big balances start with small steps. 2. Use the right investment vehicle.Managed funds are broadly considered the best way for new investors to access financial markets, and such investors will generally need some form of advice to help them choose between the thousands of fund options available. However, they should always pay close attention to any fee and commission structures, and make sure their adviser is clear about how he or she is being paid. Master trusts and wrap accounts, flexible platforms that enable investors to hold a portfolio of different funds, are increasingly popular among those with greater sums and who want the convenience of consolidated and streamlined reporting of their affairs. As well as financial advice, investors with complex needs may also need to consult accountants and lawyers specialising in estate planning (Advantage One can help here!). Discretionary family trusts and superannuation funds might meet their needs. They protect assets and allow investment income to flow to beneficiaries in the most tax-effective way. 3. Take some risks.Those who already have money in the game and have their portfolio asset allocation set may benefit from using a portion of their investable funds as "punt money". Thinking outside the box can reap large rewards. 4. Pay attention to your superannuation.The under-performance of investment funds in general in the past few years has understandably created greater awareness of the sector. Still, young Australians tend to focus more on short to medium-term wants or needs - particularly those that are lifestyle related - believing that there will be plenty of time to turn to retirement later. Instead, given superannuation's compulsory nature, they should use it to their greatest advantage. For example, most super funds offer a selection of fund options ranging from aggressive growth-oriented funds with a heavy weighting of shares and property, through to very conservative funds predominantly built with cash and fixed interest investments. Simply making sure you are in the most appropriate fund for your stage of life can make a massive difference to your balance on retirement. The rule of thumb is the younger you are, or the more time you have left in the workforce, the greater risk you should be willing to take. With time on your side, you should be able to see through market fluctuations and enjoy the power of compounding work its magic on your balance. 5. Read your financial statements.This may sound obvious, but it's not uncommon for investors to file away the relevant paperwork directly from the mailbox without so much as casting a glance at it. Wise investors will review not just the current statement but also those from preceding years to see if they can identify any clear trends - good or bad. 6. Don't keep all your money at home.Many Australian investors naturally adopt a "home bias" with their portfolios, meaning they feel more comfortable putting their money behind local companies rather than in stocks in unfamiliar offshore jurisdictions. While there have been real reasons to avoid global stock markets in recent years - the 20 per cent losses the international market has delivered in the past few years is a particularly good one - wise investors should seriously explore including global companies in a well-diversified investment portfolio. 7. Wind back your debt.Experts say we're heading for a credit crunch and that by September this year, many overextended borrowers are going to find themselves in trouble. On the other hand, many economists have downgraded expectations of continued cash-rate rises to later in the year, with one more 25 basis point increase at the most a probability. That will mean that mortgage rates or the interest costs on credit cards are unlikely to go much higher than they are now, so those who have been able to make higher repayments a on their debt than necessary may still have a buffer and may, therefore, remain outside the danger zone. Regardless, anyone who can afford to pay down "bad" debt - which, like with credits cards, cam cost more than any potential return they are likely to produce - will save themselves money in the long run and possibly prevent themselves from going bankrupt or losing their home in the short to medium term. For further information and advice, please contact Geoff O'Neil - Director |
+ 61 8 8333 1944
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