Don’t wait until your 60s to see a financial adviser
Ask most 30 year olds who their financial planner is and the typical response might be ‘huh?’ After all, financial advisers are for older people with plenty of money to invest, aren’t they?
Well, yes, people nearing or in retirement will benefit from sound advice. But so will younger people. With the benefit of having time on their side, and with some help from an adviser, a 30-something can easily establish a wealth creation plan that can deliver a big payoff in the future.
Harness compound interest
It’s been called the most powerful force in the universe, and compounding returns – earning interest on your interest – can deliver dramatic results.
Imagine that, at age 30, you commence a simple savings plan. You contribute $2,000 each year to an investment that delivers an after-tax return of 6% pa. After 30 years you will have contributed a total of $60,000, but your investment will be worth $158,116. The magic of compound interest will have delivered you an effortless $98,116! The longer you go and the more that you contribute the bigger the ultimate balance.
The wrong sort of debt can have a huge impact on your future wealth. High interest debt such as credit cards and payday loans should be avoided if at all possible. Consolidating several debts into one lower interest loan can help get debt under control and save you heaps of interest.
Even with ‘good’ debt, such as a home loan, simple strategies can pay big dividends.
For example, repayments on a $500,000 mortgage at a 4% pa interest rate over 30 years will be $2,146.90 per month. Increase mortgage repayments by $166.67 per month ($2,000 per year) and the loan will be repaid in just under 25 years, saving $80,144 in interest.
In these examples the savings plan delivers the bigger result due to the higher interest rate. However, paying down the mortgage is a low risk strategy. The higher return from a long-term savings plan is likely to come with a higher level of risk. An adviser can help you find your investment risk comfort zone.
Where will the money come from?
While many people in their 30s can easily find a couple of thousand dollars a year for savings and debt reduction, for other that’s not such an easy task. However, significant savings may be hiding in plain sight. For example, the average Australian household throws away over $1,000 dollars worth of food every year. There’s half the target already. Buying lunch each day can easily cost over $2,000 a year. Taking lunch from home occasionally could easily provide the rest.
Don’t forget protection
Regardless of age, bad things can happen. The financial consequences of death, illness or disability can be devastating, and the younger you are the bigger the potential impacts. How will your retirement look if you’re no longer able to earn an income or contribute to super?
Most Australians have much less life and disability insurance than they need. Your adviser can help you ensure that your family’s wealth creation plans are well protected.
Who’s your financial planner?
Simple savings plans or increases in mortgage repayments are simple strategies that anyone can put in place. However, we live in a complex financial environment, and expert advice can really help you make the most of the wide range of opportunities available. This includes choosing the right savings structures (superannuation or non-superannuation), and investment products that suit your resources and priorities. A planner can also help you find hidden savings, and run the numbers to help you choose between different strategies.
Ready to meet your financial planner? Just give us a call.
Book Your Financial
Receive customised recommendations to improve both your personal and business related financial health.
Latest Blog Articles
In recent times a spotlight has been shone on the gender pay gap, resulting in greater awareness of women’s conditions in the workforce. Yet we’re still overlooking how lower wages translate into a retirement savings gender gap.Closing the gender superannuation gap
When the COVID-19 pandemic struck in 2020 and Australians everywhere were forced to stop work and stay at home, the big banks reached out to affected customers offering to suspend their loan repayments and provide some much-needed financial relief. The true cost of deferring your home loan
A study conducted by the Australian Stock Exchange reported that nearly 25% of investors over the past two years were aged 18 to 24. Foundations of a wealthy lifestyle
With over 4.4 million Australians living with a disability, most families either have a family member with a disability or know of a family supporting a disabled loved one. Financial planning for a family member with a disability
NewAccess for Small Business Owners is a free and confidential mental health program developed by Beyond Blue to give small business owners the support they need. Whether you’re just feeling stressed, or completely overwhelmed about everyday life issues, they can help.
Disclaimer: This article has been prepared by Count Financial Limited ABN 19 001 974 625, AFSL 227232, (Count) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.
Information in this article is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Count, its related entities, agents and employees for any loss arising from reliance on this document.
This document contains general advice. It does not take account of your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision.