We need to talk. I know I know, not to many people get warm and fuzzy when I say that, but this is important. I want to tell you a secret. Once you hear this secret you will be shocked that no one told you this before. Well maybe they did, but you weren't paying attention were you? Are you paying attention now? Good.
You see the secret to growing your wealth isn't what the TV talking heads, the reporters, or the expert down the road are telling you. Guess what. It not about whether property is a better investment than shares. The secret to growing wealth is starting, and continuing to put a little bit away, bit by bit. Time will do the rest for you. It sounds so simple doesn't it. Really, it is. No tricks, no magic, nothing but consistency, and compounding.
You see, most of us mere mortals won't get the change to invest in the next Google, or Uber. We simple aren't in the right place at the right time, and by the time we know about it, the ship has well and truly sailed. So, in lieu of that, we have to get back to basics. Putting a bit of money aside in whatever investment we feel comfortable with, and continuing to put it there and letting it do its thing. Time will take care of the rest. Einstein said it best when he said that compound interest was the 8th wonder of the world. It allows growth to grow on top of growth and speed things up. If you could put away $1,000 each year and earn 5% per year over 25 years, at the end of the period that would worth $53,297. Not too bad eh from less than $20 per week. The beautiful thing about it is that the investment is kind of secondary. As long as there is some growth and income, over time it can grow at a faster and faster rate.
So why do we say that the investment isn't that relevant? Surely we should be shouting from the roof that one is better than the other. Well I could, but what matters more is that we start doing. If your doing is into property, then great that's your sweet spot. As long as you know the risks, you are better off than if you did nothing. Same with shares. Do you know the risks of what you are doing? No, then you either need to talk to someone about what the benefits and risks are, or it maybe isn't the place to put your money. But if you are prepared to take the risk, and all investing comes with some risk (even money in the bank), then by starting you are creating a better future for tomorrow. And isn't that what we all want at the end of the day?
So, if you are stumped about how to take that first step to putting some of your time aside (remember money is really just a store of your time) for tomorrow here are some ideas to get you started:
1. Fix your cash flow. Lets be honest. Nothing is going to work if we don't take control of our own money. If you don't know where it is going, or how much you spend, or have some kind of structure, then this needs to be fixed first. Once we have this down pat it allows us to work out how much we can afford to put away for tomorrow.
2. Think about what you are comfortable investing in. There is no point trying to put some of your hard earned money away if you can't sleep at night. If the share market scares the daylights out of you, it is either time to stay away, or time to learn a bit more about it. Same goes with property. If you aren't sure, learn before you leap. The best thing for your funds is for you to leave it there, through ups and downs, so it is best for you to be comfortable with those possibilities up front.
3. Put money aside regularly and automate! Take the hard work out of doing it. When you get paid make sure you pay your investment first, because if there is one thing we are all great at doing (myself included) it is spending what we have.
4. Here is the hardest thing you can do. Do nothing. If you have put money into a quality investment you shouldn't need to chop and change regularly. Chopping and changing adds costs, taxes and reduces the efficiency of any investment. Once you know your sweet spot stop. Only make changes when you absolutely have to, but don't forget about it! If new information comes up that suggest its time for a change do it!
5. Increase your own contributions as you have more. If you get a pay rise, put a little towards future you. After all you are saving this money so you can enjoy it some time in the future, so don't short change yourself!
If you think you need some help to get started, why don't you book in a short phone catch up to see if we can help. Bookings can be made here.
The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.