Just Because We’re Younger, Doesn’t Mean We Can’t Manage our Money!
You’re young, have a steady job with a decent income and the future looks bright.
But how bright? What should you do with that extra bit of cash you have in your pocket? It’s easy to spend big on nights out and high-end fashion labels. The ‘now’ generation is all about immediate satisfaction and instant gratification.
That’s all well and good – and no doubt lots of fun too – but at some point, you should start thinking seriously about your life choices. If you want financial freedom, you need to take an active hand in managing your money.
One of the best ways to do this is to start an investment portfolio as soon as possible. The younger you start, the bigger your portfolio will grow.
But first things first.
Before you do anything, you need to make sure you have paid off all your debt. Credit cards will eat up your finances like a hoard of ravenous kids at a birthday party. Make that your focus. Remove the debt and move forward.
Next examine your budget. How much do you spend each week on day-to-day living? How much do you need to set aside for bills? Do you really need to buy that daily coffee?
Keep a daily tally of your expenses and start being disciplined with your spending. You’ll be surprised what a difference it can make.
Then think about salary sacrifice for your superannuation contributions. Can you afford to set a little aside each week and have your employer match your contribution? Every little bit counts and can actually add up to a whole lot of big come retirement time.
It’s also a smart idea to have an emergency fund in which to put a small amount for … well, emergencies. You never know when you might need it.
Next, it’s decision time.
Do you invest in shares or property? Both have their pros and cons but let’s start with stocks.
It’s best to buy shares with a long-term goal. Plan to keep them for at least five years but 10 is even better.
Do your research. Do lots of research. Talk to a good financial adviser. Ask lots of questions.
If you are looking for a fast return on your investment then you might try stocks, stock-based mutual funds or ETFs (exchange-traded funds).
If you are looking for slower, steadier growth then bonds or CDs (certificate of deposits) might be the way to go.
Again, do your research, talk to an expert and don’t make decisions until you have the full facts and are ready to move.
When it comes to property, research again is the key to making sound investment decisions. Educate yourself.
Find out where the market is at, where the experts are predicting movement, rental prices and areas where there is room for price growth. Think about where the property is located. Is it close to shops, schools and transport routes?
Talk to a mortgage broker about your lending options and shop around for a good deal.
As with shares, look at your investment as a long-term plan and expect to hold properties for at least 10 years.
Remember when it comes to investing, it is best to start young and be disciplined. The younger you start, the brighter your future will look.
But most important of all is to do your research and get good advice from the experts. Without that your success could be limited to what you don’t know rather than what you do.
If you would like sound financial advice on how to start your investment portfolio, contact us today
