Financial planning

To get the most from your money – whether you hold it personally or it’s in your super fund ready for your retirement – it’s important to invest it where it can work hard for you. Ultimately, you want it to grow over time and at least keep ahead of inflation. The best way to maximise the opportunities is to create a financial plan.

Your income, savings, stage in life and short, medium and long-term goals will all play a part in where and how you invest your money – from keeping it in the bank to investing in assets such as shares. Even your superannuation account is a form of investment, and a very important one too.

How do you feel about risk?

All investment involves a certain level of risk, and you can read more about risk management here.

Planning to invest

Before planning to invest, it’s important to work out your current and desired financial situation, taking into account expected income and expenses over the next few years, any plans you may have that will change your current situation, such as growing your family or buying a new home, and any ‘rainy day’ contingencies. A basic financial ‘check-up’ will involve calculating:

• All expenses (current and expected)
• All income
• All assets including:
  • Liquid assets, i.e. those you can draw on or sell quickly, such as shares and cash
  • Non-liquid (illiquid) assets, i.e. those that can take a while to sell, such as real estate

Once you know your financial situation, you’ll be able to start drawing up an investment strategy. The first thing most advisors will suggest is paying off any expensive personal debt such as credit cards. You might also be able to consolidate other personal debt into your home loan, allowing you to benefit from lower interest rates and fewer fees.

Investments and super

Your superannuation is a unique type of investment as it is like a broad investment portfolio all of its own. It will usually include different types of investment assets such as cash and bonds for stability, shares for growth, and property for balance. Industry SuperFunds generally allow, and in fact encourage members to tailor their super investments to suit their own particular objectives and risk profile. 

To design your super investments to fit your circumstances and outlook, contact your super fund or visit their website and head to their ‘investment’ pages.