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!
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.
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.
Financial literacy breakfasts
As part of its commitment to enhancing financial literacy for women, La Trobe Financial is partnering with Are Media, publisher of Better Homes and Gardens, to host a series of financially focused breakfasts in May. At these events, speakers including La Trobe Financial's Deputy CEO and Chief Investment Officer Chris Andrews, who will focus on building wealth. More details will be released closer to the time on Eventbrite and in BHG. Ticket costs will also be donated to charity through the La Trobe Financial Charitable Foundation.
Make a plan to build wealth
Follow simple strategies to become a financially fit female.
Building wealth is something you can aim for at any age – whether you’re starting small or building on a solid foundation. It’s about creating an investment plan, incorporating the following strategies for success.
Focus on paying down high-interest debts such as credit cards and payday loans. Not only will this save big dollars in interest, if you then cancel the card, or at least reduce your credit limit, it will also help your credit score.
Pay yourself first
Always pay yourself first. Not spending money, but funds for investment that you set up as automatic payday deductions. The idea is by keeping these funds out of sight, you’re not tempted to spend them!
Set your goals
Set short and longterm goals and align them with ‘defensive’ (lower risk, shorter term) investments such as term deposits and ‘growth’ (higher risk, longer term) options such as shares.
Weigh up the risks
Most people know about investment risks such as rising interest rates. But other types range from liquidity to gearing, so it’s crucial to be forewarned and forearmed.
Track your net worth
Don’t just put your funds in an asset and leave them. You need to track performance so you can refresh your portfolio as needed to maintain the best returns.
Build multiple income streams
Extra revenue can be crucial in freeing up money to invest, so look at your life and skillset and see what you could monetise. Could you write a book about a specialist topic? Create an online course for digital download? Work weekends at a local shopping centre? It’s not healthy to work 24-7, but a little sacrifice of free time and expertise can be a signifi cant boost up the wealth-building ladder.
Have an emergency fund
Aim to save a few months’ expenses so if you hit lean times, you won’t have to fi resell your investments to survive.
Find a trusted partner
Look to align with a trusted wealth-building partner, such as La Trobe Financial, Australia’s leading credit asset manager, whose 12 Month Term Account has been judged Australia’s Best Credit Fund by Money magazine for the past 13 years. For more information on investment options, visit latrobefinancial.com.
Credit Fund investment is not a bank deposit & investors risk losing their principal investment. Withdrawal rights are subject to liquidity and may be delayed / suspended. Before deciding to invest, you should consider the PDS from the issuer La Trobe Financial Asset Management Limited AFSL 222213. You can read the PDS and Target Marker Determinations on our website or ask for a copy by calling us on 13 80 10.
La Trobe Financial and Are Media, publisher of Better Homes and Gardens, will host several money breakfasts in May. Speakers such as La Trobe Financial Deputy CEO and Chief Investment Officer Chris Andrews will look at building wealth. Watch Eventbrite and BHG for details, with ticket costs going to charity via the La Trobe Financial Charitable Foundation. Click here for tickets.