Matters to Consider
Understand the trade-off decisions required when developing a Plan
The main secret to increasing wealth is simple: spend less than you earn!
- many highly paid people have less wealth than disciplined people with a lower income who have a strict budget
- if money is not saved, wealth is not created – it’s that simple
- the truly wealthy people do not often get that way by spending surplus funds on having a good life now. They maintain a certain lifestyle they are happy with - and let the surplus make more money for them.
Detailed financial planning requires making trade-off decisions, given your situation:
- what is the right balance between risk and reward, given your goals?
- what is the best mix for investing salary income, pre-tax versus post-tax?
- how quickly should debt be paid down?
- what is the right amount of investments in superannuation versus non-superannuation?
- what is the best mix of managed funds and direct equities?
- what is the right amount of investing in residential property vs equities?
- how much time do you have for making buy/sell decisions of investments?
Many people are very confident in their abilities to make these decisions without taking specialist financial advice. If this is you – we hope you’re right! (Is there independent verification to support such confidence?)
For those people who are a little more circumspect, have a look at these websites:
- guide to basic financial principles ING's L-Earn website
- test your financial knowledge
- ING’s range of financial calculators
For an overview of some possible strategies in selected areas, check out these downloadable files. How many are you using?
Essentially we consider what is the best split with current and projected pre-tax income:
- how much should be used pre-tax (eg super contributions or investment loan interest repayments; income protection)
- how much post-tax (mortgage repayments; contributions to savings account or investment portfolios; personal insurances).
In summary, the investment side of financial planning:
- firstly sets goals and their timing
- then considers the pros and cons of relevant strategies including debt consolidation and optimisation, gearing, superannuation versus non-superannuation savings, direct versus managed shares, etc…
- then evaluates whether the original goals are realistic; if not what modifications need to be made
- Finally an integrated long-term plan is developed.
Contact us today to initiate
a no-obligation review of your situation
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