Money tips for the financial year ahead

Each financial year many of us make a New Year’s resolution to spend less and save more for our future, but without a plan our good intentions may not amount to much.

Let’s look at some basic rules for building and preserving your wealth in the years ahead.

Pay yourself first

Make sure that you regularly set aside some of your income before you’re tempted to spend it. Before long you’ll have enough to consider a range of options.

Invest for growth

Over the longer term, growth investments such as shares should give you a better overall return than cash-type investments, but of course you have to select good value investments and expect some volatility. If this is an area of interest, we recommend seeking independent advice.

Too good to be true

Steer clear of investments with unrealistically high returns and most of the highly tax-driven investments that you may read about – they’re often riskier than they appear.

Invest tax effectively

Remember that money invested in Australian shares or managed share funds can earn you imputation or franking credits. These effectively reduce your tax payable, leaving you with more after-tax income. With good advice, you could also consider borrowing modestly for investment.

Make the most of super

Superannuation is still the most tax-effective form of retirement saving for most people. Because of the lower rate of tax, your superannuation investments generally grow faster than non-super investments.

Spread your risk

Don’t put all your eggs into the one basket – maintain a balanced approach to investment. It is generally a good idea to spread your investments across a number of different asset classes such as shares and property, fixed interest and cash. Often if one asset class performs poorly, another may perform strongly. A diversified approach can keep your investments growing steadily.