Financial fitness

Whether you’re 30, 45 or 60... planning for retirement or looking to create a financial legacy for your family, it’s never too late to focus on building wealth. Here’s how to start.

Work out your why

Motivation is always easiest to maintain when you have a specific goal or goals, so start your journey to wealth creation by dividing yours into short- and long-term. In the short-term, one idea might be to pay off your credit card and reduce your limit, while a longer-term desire might be a share portfolio. Once you identify these goals, you can work on ways to achieve them.

Take that first step

Before you focus on where you want your money to take you, it’s also crucial to understand where things stand. But don’t be daunted – it’s very doable. First, do a list of all your assets and liabilities. Plug them into a spreadsheet and that will give you an idea of whether you’re in the black or red (noting most people with mortgages are in the red). Also do up a cashflow for the next year, forecasting incomings and outgoings as realistically as you can. This will let you see any problem months on the horizon, flag any ‘spare’ money you might have and also help you identify places to save.

Sort the small stuff

In this budgeting process, one area that will come into focus is annual costs like insurances. And it’s important with this type of bill not to fall prey to convenience by just letting policies renew – you need to shop around. With so much competition, rival insurers will work hard to win your business, and you could wind up with substantial savings. At the very least, you’ll have a bargaining chip to use with your current insurer. The message is clear – put in the effort and reap the rewards!

Educate yourself

Another key plank of preparation is to make a priority of research and education to ensure you understand the lie of the land – especially where you have knowledge gaps to fill. So learn all about trading on the ASX, from buybacks to dividends. Find out what an exchange-traded fund is. Discover the potential rewards of investing in mortgage assets. Read up on risk profiles and what you would be comfortable with. Also look beyond the big banks to non-bank players such as La Trobe Financial, Australia’s leading credit asset manager, whose 12-Month Term Account has been judged Australia’s Best Credit Fund – Mortgages by Money magazine for 13 years. It’s all about getting a handle on possibilities and deciding what to pursue.

Think mindfully

In choosing a wealthbuilding partner, it’s also important to decide what role aspects such as sustainability will play. There are some people who will only invest in renewable energy, while others look to businesses involved with philanthropy, like the La Trobe Financial Charitable Foundation, which has given more than $21 million across pillars including increased financial literacy for women. It’s about making sure the money you invest is being used to benefit the wider community and the generations to come.

Call for help

Just as you’d see a doctor for health help, it’s wise to seek guidance to help you build wealth. Attending including financial literacy events such as the breakfasts with Better Homes and Gardens and La Trobe Financial is a start.

Follow the rules

No two investors navigate the same path towards wealth. But there are two universal principles to embrace.

Don’t put all your eggs in one basket

Instead, look to diversify your investment strategy. That way, if one sector of the economy has a hiccup, say the stockmarket, it won’t necessarily set back your entire position.

Be prepared to act long term

We’ve all read success stories of overnight millionaires, but for most people, wealth doesn’t come in days or weeks, but in years and decades. So make sure that any funds you invest are monies you can afford to tie up long-term.

Important note: *This financial information is general in nature and does not take into consideration your personal circumstances. If you need advice, please seek out a licensed financial adviser.