How To Build Wealth In Australia

How To Build Wealth In Australia

Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations. There’s no shortage of get-rich-quick schemes, from buying into the latest crypto coin or flipping a huge portfolio of investment properties.

However, don’t be fooled by promises of ‘easy wealth’—there is no such thing as a sure-fire, guaranteed return on investment and the vast majority of Australians who gamble their savings on risky schemes end up losing their money.

Sometimes these ‘investment opportunities’ are little more than glorified Ponzi schemes, offering eye-watering returns to existing investors funded by money from new entrants. As the Australian Securities and Investments Commission (ASIC) notes, they all collapse eventually , often with devastating results for Aussies who ‘invested’.

Instead, spend your time learning how to build wealth over time, which requires you to make an investing plan and adopt a long-term mindset. Follow these eight simple steps to build sustainable wealth. 1. Start by Making a Plan

Building wealth starts with making a financial plan. That means taking the time to identify your goals and map out how you can accomplish them.

Engaging an experienced and reputable financial advisor is a great way to begin building wealth. It’s a more expensive option, particularly for those who are just starting out, but choosing an advisor who has an Australian Financial Services License is essential. The Australian Securities and Investments Commission’s (ASIC) Moneysmart site offers detailed tips on finding the right adviser for your unique financial situation.

Shopping around for a robo-advisor platform that also provides access to financial advisors may be a more affordable option. Robo-advisors offer a cheaper alternative to face-to-face financial advisors by using algorithms to create a Statement of Advice and investing your money according to your risk appetite and needs.

There are now a number of platforms operating in Australia, including, but not limited to, Six Park, Spaceship Voyager, Stockspot and InvestSMART. 2. Make a Budget and Stick to It

Plenty of people dread the “b” word, but budgeting is a key plank in your wealth building strategy. Building a budget and sticking to it helps increase your chances of carrying out your plan and achieving your financial goals.

Budgets also help you understand where your money goes each month and prevent behaviors that can endanger your goals, like overspending.

With inflation now at 6.1% in Australia and tipped to reach 7% by the end of the year, it has never been more important to manage your money well. 3. Build Your Emergency Fund

Speaking of inflation, when the central heating fails or the refrigerator quits working, where does the money come from if you don’t have emergency savings?

While you may not have much control of the sky-rockting prices of goods and services (and the cost of replacing them), you can at least avoid the worst of ‘bill shock’ with a rainy-day fund.

One of the best parts of having an emergency fund is that you aren’t forced to rely on your credit card for essentials.

This protects your credit history, your hip pocket (interest rates on credit cards in Australia are as high as 14%) and helps you to reap the benefits of earning interest on a savings account.

Interest rates on savings accounts have been shockingly low in recent years, but with the Reserve Bank of Australia (RBA) lifting the cash rate , pressure is building on banks to pass on these interest hikes to savings accounts. 4. Automate Your Financial Life

By making investing and bill paying automatic, you all but eliminate the chance you forget to set aside money for your goals or cave into a desire to splurge on an obscenely expensive and unnecesssary item.

That’s why it may be worthwhile deducting the aggregate amount you’ve budgeted for each of your expenses and investments from your pay and direct debit it to cover each expense.

This is especially valuable when it comes to saving and investing, as money that you do not see is money you’re unlikely to miss. 5. Manage Your Debt If you’re unable to pay off your debt, you aren’t alone: in the final two months of 2021, there was a $162 million increase in the amount of interest-accruing credit card debt in Australia, taking the total to more than $17 billion.Of course, not all debt is created equal—and some, like mortgages, may even be considered “good” debt, thanks to their (previously) low interest rates and wealth building potential as an appreciating asset over […]

source How To Build Wealth In Australia

Leave a Reply