Tips for wealth building
Posted by Northadvisory on September 21, 2020
Have you thought much about your future? Do you already have a secure financial plan in place that will allow you to retire comfortably and live the life you’ve dreamed?
If not, then today is the day… we’ve put together a list of tips that can help you start building your wealth. By making small changes and developing new habits you can make a massive difference to your financial position in years to come.
We understand that everyone has a unique personal situation, but regardless of whether you are an executive, married with three kids, or a single person running a sole-trader business, these tips can offer some beneficial outcomes.
Start automated savings
The easiest first step to start building your wealth is to set up automated savings. Every time your salary is deposited into your bank account, have an automatic transfer remove a portion and secure it in a separate account. If you time the transfer so it occurs on exactly the same day you get paid, then you don’t even have to think about it.
Once you have started to build up a significant amount in the separate account, you can consider your options on how to use it wisely.
Reducing your debt
Credit card or personal loan debt can impact your wealth building momentum, so it is recommended that you try to reduce these as soon as possible. Additional payments on loans and paying more than the minimum repayments will certainly help you get there faster and can also help to reduce the amount you pay in interest and fees.
Finding opportunities to reduce your expenses and diverting those funds to your debts will all help towards minimising your liabilities.
Secure the best mortgage
Right now, we are experiencing some of the lowest interest rates on record, and this means it is the ideal time to secure an excellent mortgage rate. Even just 0.05% variation can make a substantial difference over the life of the loan.
It’s also worthwhile considering the type of loan – principal and interest, or interest only – and the length of loan term. Ideally, you want to take the shortest term you can afford, as this directly impacts the amount of interest you will pay. And when it comes to interest, you should also weigh up the pros and cons between fixed interest or variable rate loans. Both have their benefits, but you need to select the type that suits you best.
The next step you can consider in your wealth building journey is to start an investment portfolio. Perhaps you have accumulated a solid amount in your automated savings, or you receive a lump sum through a windfall or a redundancy. Whatever the trigger, it is worthwhile discussing your options with a professional financial advisor.
It’s important that you select an advisor who you trust and who has a deep understanding of your financial position. It’s also critical that they recognise the tax implications of their financial planning advice… as the more you earn through investments, the greater your tax obligations could become.
Protecting your wealth
Once your wealth is growing, it’s imperative that you put protective measures in place. This can include various insurances such as income protection, life cover and total and permanent disability.
This protection will offer you peace of mind, knowing that you and your family will be covered should something happen and you are unable to earn an income. The last thing you want is to have to access your investments or other assets to keep on top of your bills.
When you start to consider retirement, one of the first questions you might ask yourself is “How much do I need?” The answer will be different for everyone, as there are many variables depending on the type of lifestyle you wish to lead.
If you are used to having a certain level of disposable income, you need to be well-prepared, to make sure you will be free from financial strain. This is why superannuation and retirement planning are crucial to your overall wealth building strategy.
Take the time to assess your super fund, make sure you have the right mix of diversified assets and that you are generating adequate returns.
Seek professional advice
Wealth building and financial management are complex. We understand that there are many decisions to make along the way, and sometimes it can feel overwhelming.
Here at North Advisory, we are committed to helping you secure your financial future. As your trusted partner, we’re with you every step of the way… protecting your wealth and providing a complete range of financial solutions. If you’d like to find out more about our financial advisor services, contact our team today. Read more Personal Wealth Management articles.