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You’ve gone and done it! From creating a budget to learning how to save better, you’ve made leaps and bounds towards becoming an even better Financial Wellbeing. Let’s now look at how to keep growing your money into a healthy future savings fund. Remember: being a Financial Wellbeing is all about work/life/money balance.
What’s your appetite for risk?
Any investment exposes you to some level of risk, but some options are seen as ‘safer’ than others. For example, bonds, term deposits and most savings accounts are considered low risk ‘defensive’ investments. On the other hand, shares and property are often considered more ‘high risk’.
If you don’t need access to your invested money for another 10 years, you might consider a higher-growth (and therefore riskier) option, as you’ll have time to ride out the ups and downs of the market. If you need your money sooner, you might take a more defensive position to preserve your wealth.
It’s therefore recommended that you select investments that match your risk appetite and your stage of life. Don’t worry – this step will help show you how.
Diversity is key
Investing can be full of ups and downs. Fortunately, most markets fluctuate in different ways at different times. Having some variety in your investment portfolio can help weather the storms and reduce your exposure to risk.
When you’re ready to invest, consider diversifying with:
- Different types of investments: shares, bonds, property, currencies or cash
- Different industries: like health, banking, or property
- Multiple regions: holding Australian and international assets can reduce exposure to poor economic performance in a particular country
Be sure to check your portfolio often and make changes when the risk level isn’t consistent with your financial goals or strategy. Check in with a financial planner if you need a little guidance.
The golden rules of investing
Before we go deeper into the types of investments available, here’s what MoneySmart suggests you keep in mind before making that deposit:
- Work out your financial goals
- Decide how much risk is best for you
- Check your investment is licensed, for example, you can check basic facts about companies, schemes or personal property at ASIC
- Get to know the investment
- Use diversification to spread your risk
- Watch out for get rich schemes and investment schemes.
Source: ASIC’s MoneySmart.
Break into the property market
Whether you’re paying off a home loan as quickly as possible, or considering buying an investment property, this could be an effective way to build wealth.
Over the 12 months from June 2020 to 21, median property values increased by a 16.7% on average across Australian capital cities. But do your research, as not all property sells at a profit, and be patient – capital gains take time.
The ANZ Property Profile report can help you understand which homes may be worth your time considering with a comprehensive, 16-page report, providing estimated property price information, suburb insights, comparable sales results, sales and rental historydisclaimer.
However, if you're looking at paying off your mortgage quickly, our home loan repayment calculator can help you sense check your repayments.
Finally, if you need to talk to someone about purchasing a property and looking to understand how much you could borrow connect with one of our home loan specialist, when and where it suits you.
Show me the shares
Shares (or stocks) are units of ownership in a company. Essentially, they allow you to invest in the long-term success of a business – without having to do any of the work.
Typically, the starting amount for investing in the share market is $500 (plus brokerage fees). If you're thinking of kick-starting your investment portfolio, you could be closer than you think. While the share market has historically gone up over time, there are periods of short-term volatility, so be prepared to ride out the ups and downs of the market.
Supersize your superannuation
Most working Australians are already investing, as 10 per cent of your pay goes into your superannuation account.
Your Super fund is most typically invested in shares, so you could think of it as your personal share-investing portfolio. To boost this vital retirement resource, just remember the three C’s:
- Check your balance regularly to make sure your choice of fund and insurance options suit your stage of life
- Contribute extra when you can (there may even be generous tax concessions if you do)
- Consolidate your super accounts so you’re only paying one set of fees.
Don’t stop at super
If you’re in front – high fives! If not - perhaps you could consider diversifying your investment portfolio with some other types of investment. If you’re catching up, read on to learn about living the life you want after working.
Planning for retirement can either seem overwhelming, or incredibly exciting. But everyone’s plans and needs are a little different. Our biggest tip? Start now. Today. Yesterday! When it comes to preparing for retirement, time and compound interest are your friends.
Make a plan
A retirement plan puts you in the driving seat of your own fate, to live the life you want when you stop working, and not rely on anyone else. You don’t have to be rich – it’s more about being able to live the lifestyle you want and manage the unexpected.
Assess what you’ve got
It’s time to work out your net worth in terms of property, savings and investments. You want to know how much money you have now, how much you might have down the line, and how much you’ll need to survive or live comfortably in retirement.
For a couple, a yearly budget of $63,799 is recommended in retirement by ASFA for a comfortable standard of living; for a single person it’s $45,239 for those around 65 years of age.
Make a ‘Plan B’
Plan A is to retire when you want. If that’s not realistic you’ll need a backup plan which may include working part-time while drawing down on your super.
Feeling more familiar with investment options? You got this …
Generally, the lower the risk, the lower potential return. You'll need to take some risk to end up with a healthy return over time. Help protect your wealth by researching any investment thoroughly, invest at your comfort level and have a plan in place for a rainy day.
Pro tip
When researching the money you’ll need for retirement, go easy on yourself and use a calculator like MoneySmart retirement planner. It estimates your future income based on your super projections AND the age pension.
Insurance is one of those strange things where you don’t really think you need it – until you do. Here are some of the most common insurance options worth considering...
Health insurance
Policies can vary greatly from one provider to another. So, shop around and take the time to learn about things like exclusions for pre-existing conditions and limits on how much you can claim.
Income protection
Plan to reassess your premiums every few years to make sure they fit your current situation. They are a lever you can pull if things get tough and you need to lower your expenses, or in case things are going great and you have more to protect!
Home insurance
Chances are you already have home insurance to protect you from natural disasters like storms, floods and bushfires. But you’d be surprised how many people are under-insured. Do you know how much it would cost to rebuild your home? Have you made renovations that have added to the value of your home? It can’t hurt to re-crunch the numbers.
Life insurance
Designed to help you and your loved ones maintain your lifestyle and financial wellbeing if anything serious should happen to you, such as illness, injury or death. If you’re shopping around, take the time to understand the cost of premiums, what’s covered, and how your medical history might affect future claims.
Use this simple insurance estimator to help you estimate the amount of life, total and permanent disability and income cover you might need.
Feeling ‘super’ ? You should be.
You've completed the last step in the ANZ Financial Wellbeing Program. We'll be right here for you anytime you need a refresher. And don’t forget to re-check your score!
What's next?
1. Get your score
Take your score again to see if all this effort is already paying dividends.
The information set out above is general in nature and has been prepared without taking into account your objectives, financial situation or needs. By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.
ANZ does not use the information you provide for the purpose of assessing any application.
A price range estimate is an estimate only. It is based on certain available information provided when ordering a Property Profile Report. It is not a valuation of the property or a guarantee of its market value or future sale price. Price range estimates may change daily and the actual sale price (if the property is sold) may be different.
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