Here’s three easy ways to make sure that you have a sound financial future:
1. Don’t waste time – start investing as soon as you have an income.
How many times have you heard people say “ I want to travel, have fun and buy what I like before I get serious about investing”. Now there’s nothing wrong with any of those things. Who doesn’t want to travel, have fun and buy stuff with their excess income?
The trouble is that it becomes a way of life and we too quickly become accustomed to splurging on a regular basis and thinking that we couldn’t possibly live any other way!
As time goes on, we meet Mr or Ms Amazing and settle down to a more sedate, even, dare I say, “family” life. The sad part is that we still have an “I want everything now” mindset and we don’t have any kind of investment plan that will build our wealth while we live “life”.
Most people don’t realize that you can actually have both – spend and invest. That may seem a little crazy on the surface but if we had an investment plan and knew what we actually wanted our income to do for us, we could easily have our lifestyle as well as our investments. It’s all about the Plan. Our financial plan should start as soon as we earn an income so that we don’t waste valuable years out of the investment market.
2. Use your income for Good, not …………
I like to think of this as using your income to the max. Most people aspire to get a very good job which usually comes with an equally good pay packet and life will be sweet. You won’t have any money worries because the income will take care of it. Right?
Wrong. Most people spend as much or more of their income that they earn each week and here’s where the problem lies. They are so flat out earning an income to try and keep up with their spending habit that they don’t consider that there are ways to make money from the income they earn.
Here’s a quick example: A client recently turned 40 and it was a real turning point for her. She had never owned property and always rented new apartments as she liked really “nice” places to live. Each year she went on an overseas holiday and didn’t hold back in buying most things that she wanted – great car, clothes etc. There’s nothing wrong with any of that except that when she turned 40 she realized that she had nothing in place for her future. She purchased an apartment off the plan and it costs her around $100 per month to hold. Effectively, she now controls an asset worth $300,000 which will grow in value over time and it costs her next to nothing to hold. She made a decision to invest some of her income to secure her financial future. She has realized that she can easily earn money to make more money and has decided to purchase more properties as she really likes the idea of being able to have a great lifestyle in retirement and yes – my client acknowledges that she should have started investing at least 10 years ago as she would have been several hundred thousand dollars better off. Better late than never!
3. Don’t stop acquiring Property
Only 1% of Australian property investors own 6 or more properties and yet having a portfolio of 6 or more will place you in the top 3% of incomes in retirement.
The most powerful way to keep moving a property portfolio forward is to keep earning an income. Borrowing money to purchase investment properties is dependent on that all important income.
With an investment plan in place that income can be maximized and grow well beyond any money that is earned and saved over a person’s lifetime. Most people work until at least 60 years of age and as the Baby Boomer generation move closer to retirement, many will work well beyond the retirement age because they just can’t afford to retire.
For everyone else, the message is clear – keep acquiring investments until you can no longer work and then make choices about what you will do with those income streams.
Without investments, Australians will be reliant on their superannuation, any savings and the pension, which in my opinion is a pretty miserable retirement lifestyle.