Kick-starting an investment plan

Sometimes saving here and there isn’t enough – that’s when it is time to consider an investment plan for your financial future.

We all know we need to save. We know it’s good for our future and we know it makes life much easier when we have a little bit extra in the kitty.

But sometimes that little bit extra isn’t really enough. That means it might be time to go that extra mile.

Savings accounts are a start, but a good investment plan can give you a little bit more wealth which can really help you out.

To start with, you must be serious about setting financial goals so that it’s clear what you want your investment plan to help you achieve. Being committed to achieving your goals and having a clearly defined investment plan is crucial. It can help with providing a more comfortable life and future.

Setting up an investment plan

Setting up a regular investment plan can take a bit of time, but once it’s in place, there’s no doubt you should start to see its benefits.

Whether you want to have enough cash to pay for your children’s education, help them set up house or you just want to breathe easy on the money front in retirement, you’ll need to kick-start a regular investment plan now.

There are almost limitless options to explore when it comes to investing, and financial advisers can help you plan for the right ones.

To help you start thinking about your investment plan here are some quick investment tips:

1. Clarify your investment goals

Are you planning for the short, medium or long term? What goal do you want to achieve and how quickly do you want to get there?

2. Pay yourself first

Make sure you allocate money to yourself before you spend money on unnecessary expenses.

3. Set up an automatic payment

It’s simple to do and streamlines the process for you so you don’t have to worry so much about servicing bills. You can set up a direct debit to another savings account, or even a regular BPay payment into an investment like a managed fund. You should speak to your bank about what options are available to you.

4. Invest your savings to grow

Saving is essential. But it is also important to consider other investment opportunities that can make your money work better for you (for example, investing in managed funds, shares or an investment property). Get financial advice if you aren’t sure which way to go.

5. Harness the power of compound interest

Compound interest is simply interest on your interest – the more money you have invested (whether your own or from investment returns) the more you may have to make money for you in the future. Here, time is important – the earlier you can start the process, the greater the likelihood compounding can make a huge difference to the value of your investment.

6. Diversify your wealth

Investigate options to channel your money into different asset classes (e.g. shares or property) to help maximise gains and manage your investment risk.

7. Consider tax-advantaged investments (not tax-driven investments)

Financial advisers can help you identify a tax-effective investment strategy for your situation. By reducing the tax you pay on your investment returns, you can give your money a better chance to grow.

8. Time in, not timing the market

Make a decision to set up good investment strategies rather than trying to dip in and out of financial markets and potentially losing money by stepping in at the wrong time.

9. Get some advice

Financial advice can save you money in the long term. See Questions to Ask Your Financial Adviser.

10. Do something now

It’s not difficult to turn savings into a positive, ongoing investment.

Choosing an investment plan now can make a difference to your future, but remember to review it regularly – your goals may change through life, and your investment plan may need to change to reflect that.

This article was first posted on The Wealth Generation Investor Resource Centre