Thought starters
Financial principles to help you retire well
Warren Buffet once said: "Someone's sitting in the shade today because someone planted a tree a long time ago." Mr Buffet is someone who’s made an art form of taking the long view, and choosing wisely.
Following these personal finance principles can help you have a seat in the shade come retirement time.
Having a budget doesn't mean being on a budget
Being on a budget is not about tightening your belt, going without. Having a budget is about awareness and control. It's knowing what you can spend and then having fun spending it. It's freedom that comes from knowing what your options are. Having a budget is a way of giving you more opportunities, not less.
Try our handy online Budget Planner.
Good debt
Contrary to what most people think, not all debt is bad. In fact, some debt – the good kind – can actually help you achieve your goals. The easiest way to think of good debt is to think of it as paying for something that increases in value or creates wealth in the long run. Good debt comes in the shape of, for example, a home loan, a loan for an investment property, and borrowing to invest in shares (such as margin lending).
Few people ever manage to pay cash for their house – they borrow from a financial institution and pay it off. Choose wisely and this is good debt. The same principles can apply to buying assets to secure your future.
Too much cash can be a bad thing
Having access to cash is important, obviously. But holding too much cash can limit the potential for growth. That's because inflation erodes the real value of your dollar. The trick is to create the right balance of cash to meet your needs, but not too much that you lose the opportunity for long-term capital growth by diversifying in other areas. We can help you work out how much is too much.
Don't set and forget
The current worldwide shifts in demographics will bring about great economic, social and cultural changes. This will most likely cause changes to retirement that we haven't yet imagined. That's why it's important to regularly review where you've been and where you're headed. And shift gears or change course if you need to.
Whilst “set and forget” and “buy well and put it in the bottom drawer” were once time-honoured investment strategies, in today’s more nimble world, you could be working against your own best interests if you don’t occasionally review your strategy.
Get a second opinion
When it comes to planning your finances, it pays to get a second opinion. A fresh set of eyes often sees opportunities you might have missed. A quicker way to achieve a goal or a different path that will bring you greater returns. If you were right the first time, it's reassuring to know you're on the right track. And if there's a better way to go, wouldn't you like to know it?
If you'd like to talk to someone about your retirement plans, call us today on 1300 661 577 for a second opinion.
