Tag Archives: Finance

How much do I need to start investing?

By Robert Wright /September 02,2019/

While investing might seem daunting, you don’t need a huge amount of money to start.

While investing into traditional property might require a significant deposit, and a commitment to a long investment horizon, investing in shares, ETF’s, managed accounts or managed funds can be accessed with a much smaller outlay along with the benefit of shorter term access to the value of your investment should the need arise.

It’s all about knowing where to start, which is quite often the hardest step. But we all have the potential to be successful investors – all it takes to get started is being armed with the right knowledge.

Taking the first steps

While some prefer to take the first few steps alone, others seek professional advice before investing. Either way, it’s important to select an investment type after you have done your research, determined your personal goals, and weighed up how you feel about risk.

Considerations such as your investment timeframe, current market conditions, expectations of future market conditions, and your tolerance to capital loss, and volatility (both positive and negative movement in returns) all need to be taken into account when choosing the right type of investment. This step alone is critical in assessing your propensity to take certain levels of risk to achieve an expected return over a given timeframe. 

As mentioned above, it doesn’t take a lot to get started. You can begin investing directly in shares, or a managed investment (offering a diversified range of investment assets including shares), with a lump sum of as little as $1000, or less when setting up a regular investment plan. You can also contribute regularly to steadily grow your investments and build a diversified portfolio – while taking advantage of the benefits of compounding returns.

Paying yourself first

If your budget isn’t quite working and you’re struggling to set aside funds to grow initial capital, there is an alternate strategy.

Called ‘pay yourself first’, instead of aiming to save whatever is left over after regular bills and expenses, consider setting aside a fixed percentage of your regular wage or salary as soon as you get paid. Better still, set up an online funds transfer with your bank timed with each pay day, so that this amount goes directly into your savings account – you may be surprised how quickly you can accumulate funds to start investing.

Doing the groundwork

Be sure to do plenty of research so you understand the market and assets in which you’ll be investing. You should also research the products you’ll use to invest in that market, such as a managed fund (you should always read the Product Disclosure Statement for the fund itself). For shares in a listed company, it might mean looking at companies’ annual reports, analyst research reports or on a stock exchange’s website.

The key point is, there’s a wealth of information you can, and should use, to help decide which investments to consider. This information should also provide insights into the risks and to some extent the tax implications of the investment you are considering.

Another critical piece of research and decision making driver when choosing the types of investments to use is looking at the costs of investing. Things such as brokerage when purchasing shares, management fees and buy/sell costs when purchasing managed funds are key when investing as when investing small amounts, fees can play a major part in impacting your initial outlay. 

Source: BT, 2019

It’s time to close the gender superannuation gap.

By Robert Wright /April 05,2019/

In an ideal world, we’d retire from work when we felt like it, free to travel the world, take up a new interest or just relax. But, many women don’t have that luxury. They are living longer than men but retire with 37% less superannuation. And for vast numbers that could mean restricted choices about how they live their retirement. 40% of single women live in poverty and among married women, 44% rely on their partner’s income.

This gender super gap is caused by a number of reasons.

• Women working full-time earn 18% less than men.
• Women are more likely to work part-time and they generally take time out of the workforce to raise a family or look after elderly parents.
• They’re not planning ahead with super contributions if they want to start a business, travel, study or take a gap year.

In 2018, women in full-time work took home an average $25,717 a year less than men. While raising their children, women often return back to part-time work: 45% of women work part-time compared with 19% of men.

HOW TO ACHIEVE #BALANCEFORBETTER?

Short of major changes in the world of work and superannuation policy, the way to achieve a better super balance comes down to you. Rest assured, there’s a number of ways to do it. First of all, “get educated”, says Nikki Brown, Vice Chair of Women in Super.

It’s advice that applies to any age. If your knowledge about financial matters is limited to checking your superannuation statement or balance on your app, learning how to drive your super more effectively doesn’t have to be a stretch. Your superannuation fund’s website will provide lots of information. You can also visit an independent site such as the Australian Securities and Investment Commission’s MoneySmart for easy-to-understand information about how super works and the options available to you.

If that’s not your thing, the next step may be to talk to a financial adviser who can assess your financial position, discuss your plans for the future and lay out some possibilities that might suit your situation.

For young women just starting out in their careers, retirement is hardly a pressing concern, but making your money stretch further can be. This is a great opportunity to make one of the biggest changes to your financial fortune later in life.

START THINKING ABOUT THE FUTURE NOW

The best thing you can do is to start early in building your retirement income. A little bit extra towards your super now could grow to a bigger amount later on.

Don’t think that it’s too late once you hit your 40s to make a difference to your super balance. Sure, you may have stopped work for a period to have a family and you may now be working part-time. Or you may be divorced and struggling to make the rent or mortgage payments, let alone super contributions.

But, at this age, and later in your 50s and 60s, the friends of your future financial stability are continued employment (while you’re working, you can contribute to super); having a budget (live within your means); getting good financial advice (understand it yourself or talk to an expert).

If you want to know how you can better manage your super and build it as an income stream for your retirement, you can talk to you super fund or seek advice from a financial adviser.

Source: Colonial First State, March 2019

How women can build their financial literacy

By Robert Wright /March 22,2019/

Recent studies show that more than two in five Australians lack confidence when it comes to financial decision making.

The Federal Government believes this is largely due to a lack of financial literacy within the community, which is why it has developed the National Financial Literacy strategy. This initiative aims to motivate Australians of all ages, genders and socioeconomic backgrounds to engage more with their finances. In turn, this will help people make informed financial decisions that will improve their economic wellbeing.

What does it mean for women?

As social norms and family structures have changed, financial decision-making is no longer the sole domain of the male breadwinner – these days it’s just as important for women to take charge. Yet women experience higher levels of stress when it comes to managing money, with more than a third saying they find it overwhelming.

That’s why it’s vital for women to build their financial literacy. Becoming more financially savvy can change a woman’s life, by empowering her to be self-sufficient and make confident decisions that will improve her financial situation. Currently only 10% of Australian women retire with enough savings to fund a comfortable lifestyle – so by arming women with strategies to help close the ‘super gap’ at each life stage, they may become less reliant on social services in retirement.

How you can take control

The financial decisions women make throughout their lives can impact their financial position in later years. With this in mind, here are some things you can do to take control at each stage of your life journey.

Starting out

Generally speaking, the gender pay gap puts women on the back foot as soon as they enter the workforce. Although there may be greater equality between the sexes than ever before, women’s average salaries are still 17.3% lower than those of men doing the same job.

This highlights how important it is for women to be able to budget if they want to build their savings and get ahead.

Raising a family

Women are still more likely than men to take time out of the workforce to raise kids, which means they receive less in employer super contributions during their careers. This leads to a significant super gap – men have an average super balance of $292,500 when they retire compared to $138,150 for women.

That’s why you need to prepare carefully for your career breaks, and top up your super either before or after to make up any shortfalls. The Government’s Parental Leave Calculator and Career Break Super Calculator make it easier to plan your finances around having a family. Visit https://www.moneysmart.gov.au/tools-and-resources to access these calculators.

Paying off debts

If you’re like most women, the largest debt you’ll ever have to pay off is your home loan. Before taking the plunge into home ownership, a Mortgage Calculator can show you how much you can afford to borrow, so you can work out a repayment plan that fits your budget. And if you’re prone to splurging on your credit card, a Credit Card Calculator could help stop your debts from spiralling out of control. Visit https://www.moneysmart.gov.au/tools-and-resources to access these calculators.

Investing for the future

With lower confidence levels and a smaller appetite for risk in their investments, women are less likely than men to choose high-growth investments like shares. This also means they miss out on potentially higher returns. But as women generally retire earlier and live longer than men, they can expect to spend more time in retirement – which makes it even more important for them to have enough money to last the distance. As the first step, make sure your investment mix matches your life stage. That way your super and other investments will have the best chance of growing over time.

Your financial adviser can help

Because women face so many distinct challenges, they need customised solutions – which is where a licensed financial adviser comes in. If there’s ever an aspect of your finances that you’re unclear about, let your adviser know. They’ll be able to explain it in a way that makes sense to you, so you can make wiser financial decisions.

Source: AMP News & Insights.