Steps to building wealth…
8th August 2018
Many people will delay taking control of their finances because they don’t have the time, it’s too daunting or they don’t know where to start. The reality is saving for retirement is about starting early, saving consistently and letting compound growth do the heavy lifting.
The first step is always the hardest.
Earn – In your early years income may only be enough to cover the basic essentials. A budget is important to determine when you will have saving capacity and if possible, what reductions can be made to expenditure.
Save first, spend later – As we get older and income generally rise, it’s amazing how quickly we can adapt our lifestyles to the additional income. Success in this stage is about having a savings plan, which could be as simple as directing regular money to a bank account, or in an investment option such as superannuation.
Invest wisely – Before making investment decisions you need to consider your individual investment time horizon, liquidity needs tax considerations and risk tolerance. A long-term investment strategy can then be developed to build a diversified portfolio. Regular investment can help reduce timing risk.
Preserving – Moving closer or into retirement, your shortening investment time horizon becomes highly relevant. Spend time reviewing what anticipated drawdown is required to provide a steady cash flow throughout retirement plus any capital for estate planning goals is needed. The most overlooked element of retirement planning is longevity risk, or running out of money before you run out of life.
Providing you start with a good plan early, take your time, and save consistently you’ll find yourself a wealthier person sooner than you might have imagined.
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Don’t neglect retirement savings
