If I Was 25 Again... I would buy a pre-loved car + 8 Financial Pearls of Wisdom.
As soon as you drive that shiny new car out of the showroom its value drops by thousands of dollars. You don’t notice it, but that’s real money down the drain. That’s why one of the great and often quoted financial tips is to 'buy the cheapest car your ego will allow you to'.
Cars are now far more reliable than they used to be and the remainder of the new car warranty, which can be up to seven years, will often transfer to the new owner. Much of the loss in value on new cars – the depreciation – occurs in the first three years.
Going for something with a few k’s on the clock would save me thousands. I’d also check out the service costs of the car I was thinking of buying. They vary enormously with the make of the vehicle, it can really add up over the years and with all the different cars you own.
When I was 25... retirement wasn't even on my radar, it was something my parents/ grandparents were concerned with but not me. Over my working life it has become more real and I look at all the things I would like to achieve in retirement but am I truly ready for the time in my life when I no longer have to work, I worry if I will have enough to achieve my retirement goals?
Don't panic! Read the following 8 Tips and if necessary, act now. After all, it's your future - and it could be here sooner than you think.
1: What do you want and how will you get it?
What are your goals and objectives for your retirement? Write out a plan that sees you enjoying the fruits of your labours. Then make sure your finances can achieve your goals. If not, do something about it now while you still have time. Be realistic and set achievable timeframes.
2: It’s not just about returns; remember the risks
Every investment has some degree of risk. Cash is considered the safest as there’s a good chance your money will still be in the bank when you need it. The downside is that it pays the lowest return; it isn’t tax effective; and doesn’t tend to keep pace with inflation. To achieve higher returns and make your money work harder, you need to take appropriate risk. Understand the differences between the various investment assets available and make your decisions wisely.
3: Share it around
To help reduce risk, share your investments across several asset classes - and within those asset classes as well. The right balance will depend on your financial objectives, the amount of time you have available to invest, and your risk tolerance.
4: Don’t forget super...
Superannuation will be your bank account when you are no longer working so you should be considering ways to boost your superannuation balance prior to retirement. But be aware the tax benefits are not always equal so make sure you have a balance of inside-super and outside-super investments.
5: ...or tax
Tax is the trickiest area of all. Always make sure you get good advice on investing tax-effectively. A simple restructure of an underlying asset, investment vehicle or ownership structure can help you to minimise the amount of tax you pay and maximise your after-tax return.
6: Retirement can last another lifetime
With medical technology and improved lifestyles we are living much longer than previous generations. The older you get, the longer you’re likely to live. Being prepared for a longer retirement means that your money must last longer, so don’t be too conservative with your investments.
7: Stay cool
You are in this for the long term so when markets fluctuate and investments unexpectedly fall in value, don’t panic and sell. Sit down with your adviser, review your portfolio and stay focused on your long-term goals and objectives.
8: Keep learning
You are never too old to learn. Financial advisers have an important role in giving you tailored guidance, but you still need to make your own informed decisions about your financial plan - do some research. Make sure you understand everything and if not, this is what we do... get in touch with us and ask questions.