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By Julie Nipperess
If you’re aged between 30 and 50, and your financial mantra is something along the lines of “getting ahead,” then you’re definitely what we money coaches and financial planners call a ‘wealth accumulator’.
If you’re in the ‘wealth accumulation’ years, you’re likely to be juggling a lot of competing priorities, like raising a family, while still working on your career. You’re more than likely in debt, paying off your home, and if you’re not already dabbling in investment, then you’re probably considering it.
You’re most likely at a point where you want to be enjoying what you’ve already worked hard for, but you’re likely to be very mindful that these are also your years of ‘strong earning capacity’ and as such, it’s important to make the most of them. You’ll be keen on reducing your debt, but also on the lookout for opportunities that will help you to build your long-term wealth.
If you identify with this description, then this blog is for you.
Here are six things you should be doing with your money.
Often the key to successful saving is to automate a transfer of funds into a separate account every time your salary hits your bank account. This way you don’t even think about it.
You know, it’s ironic that even though we call these the ‘wealth accumulation years’ they’re typically the most expensive in terms of general living costs (especially if you’re raising children, and perhaps even on a reduced income with one partner out of full-time work caring for the kids). This is exactly the reason why it’s critical that you don’t let your savings slip.
In case you missed the news, interest rates are at all-time lows, and are tipped to go even lower by the end of this year. So, if you haven’t already shopped around for the best rate, now is the time to do so! It’s worthwhile getting a mortgage broker to conduct a health check on your mortgage – not just now – but from time-to-time during your ‘wealth accumulation’ phase, to compare your interest rate, but also look at the type of loan you have and the fees and charges associated with it. It’s important not to get complacent with your mortgage.
Home loans are highly competitive – there are a lot of providers in the market, and often the less well known lenders will do a better deal than the ‘Big 4’ Banks. Usually, if you take the time to shop around or use the services of a broker, you can get a better deal. Just be aware there could be break costs.
Did you know that you can start a managed fund or a small share portfolio for just a few thousand dollars?
If you’re a nervous investor, starting small is a good way to get a feel for the cycle of investments, how they perform over time, as well as fees and charges. If you’re not sure about managed funds, then consider another type of investment – there are so many to choose from.
A financial planner can guide you in the right direction, and make sure that you conduct all the right checks and balances on the opportunity as well as calculate the risk versus return, so you can make an educated decision about investing your hard earned money. A professional planner can also advice on an appropriate investment strategy, depending on what you want to achieve over the short-and-long term.
Essentially, this means put the right insurances in place. Most Aussies are notoriously under-insured, and quite frankly, a “she’ll be right, mate,” attitude will get you nowhere if you suddenly find yourself unable to work, or having to take time off work to care for a seriously ill or injured spouse or child. It’s never easy to confront this stuff.
But ask yourself this – if something did happen … would you be able to keep up financially?
Or would you need to start selling off all that you’ve accumulated so far to keep the bills paid? Insurance not only makes life simple if tragedy strikes, it means that you don’t have to lose everything you’ve worked so hard for.
This becomes pretty important when you hit your 40s and 50s, but if you make a commitment to start maximising your super in your 30s, then you’ll be in a much, much stronger position in retirement. Ensure that you have a strategy in place for contributing as much as you can during your ‘wealth accumulation’ years, and if you have a non-working spouse, find out ways you can make a spousal contribution – this can be advantageous for your tax.
Along with properly insuring ourselves, this is something else we’re pretty woeful at. And while will kits are undoubtedly handy, it really does help to know what you’re doing when you’re allocating your assets post-mortem.
If you don’t do things the right way, your beneficiaries can, in some instances, end up with a massive tax burden. And did you know that you can’t just lump your super in with all of your other ‘assets’? Super is classed differently and needs to be dealt with separately in your will.
Lastly, make sure you keep your will up to date. If you don’t, there can be serious consequences, especially if your family circumstances have changed. Divorce, blended families, changes to your financial position – these are all life events that can affect your will. Estate planning and making a will is not always straightforward, so consider professional advice.
This is general advice and should not be treated as personal advice. Julie Nipperess is an authorised representative of Step Up Financial Group, Pty Ltd based in Orange NSW. ASFL No: 512509.