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Knowing where to start
There are so many different investment options available that it can be difficult to know where to start.
If that statement alone makes you feel overwhelmed and you want give it all up as being all too hard, then follow my first tip:
“If in doubt, at least start by saving into a regular bank account. Just start!”
Now that you have gotten over the first, often challenging hurdle of starting, pat yourself on the back and acknowledge your great progress. You can now use your time to investigate other, perhaps better, places to invest your savings.
Options, OptionsIn the article on when to start I gave an example of the benefit of saving extra into your Superannuation. You may also often hear people say “pay off your mortgage first”. Others, including colleagues and taxi drivers, will tell you that you should be in shares. Family members may tell you to invest in bricks and mortar, as property always makes money.
Each of those options may be a suitable option for you. But they may also not be, as each has some very important disadvantages. For example:
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Superannuation provides tax savings but your funds may be inaccessible for many years (even decades) after you invest them.
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Paying of your mortgage may save you interest but it is not actually saving towards your retirement. Your home is a lifestyle, not investment asset.
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History demonstrates that investment in businesses, via shares, has provided some of the highest annualised returns. But, nothing is for free and that extra return from many businesses has been balanced by below average returns and even total loss in other businesses. Can you handle the risk?
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Property can sell below the price you bought it for (just ask people in Sydney and Melbourne), and can cost you lots of money in maintenance along the way.
If you invest blindly, or take advice from people who aren’t specialists you could find yourself with unintended consequences. Consequences that could cost you money, cost you in missed opportunities, or cost you in heartache. Each of these consequences is not supportive of your dream lifestyle.
Be an informed investorThe best way to avoid unintended consequences is to be an informed consumer. This does not mean that everything will be perfect. It means that you know where things may go awry if they don’t turn out perfectly. And it means you will also have some backup plans ready to spring into action. An informed consumer is ready to manage and minimise any negative consequences.
The other main benefit of being an informed consumer is that it gives you the peace of mind that you are on track to achieve your lifestyle dreams. You may also be comforted in the knowledge that you are in control of the achievement of the dreams.
Becoming an informed investor
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Investigate the options available
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Identify the benefits
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Understand the disadvantages and cost
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Be clear on what you are trying to achieve, and be clear on your needs.
Helping you take controlIf you are inclined to manage your own investments, FinDre helps you become an informed investor with:
Our Financial Planning service is ideal if you would like support and advice on the appropriate strategy to achieve your lifestyle dreams. Our service includes specialist advice on:
Our full financial plan includes advice on the following investment areas:
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How much to save each year to meet your lifestyle goals
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Which strategy to use: Superannuation or Non-Superannuation
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Debt reduction
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Whose name to invest in – for couples
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Which asset classes to invest in, and how much in each
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Which investment products to invest through
Still feeling overwhelmed?Choice is wonderful. Don’t let it overwhelm you into inaction. Inaction can have a huge impact on the achievement of your dream lifestyle. If you start to feel overwhelmed try one of the following antidotes:
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Matt Hern trades as FINDRE
(Empowered Wealth Pty Ltd t/as)
ABN: 21 592 525 720
Phone: 08 9467 7320, Fax: 08 9463 7848
PO Box 259, Bull Creek, Perth, Western Australia 6149, Australia
Website: www.MattHern.com.au
Blog: www.Money-Guide.com.au
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