End of Financial Year Tips

As we approach the end of financial year thoughts turn toward tax returns, deductions and getting your paperwork in order. While you’re in the money mindset why not also take time to review some of your other financial issues. Here are some quick tips you may want to consider to get you set up for the next year and beyond.

Review Your Goals

A wise person once said that “a dream without a goal is merely a wish”. Wise indeed – and it applies as much to your financial life as anything else. Having specific and quantified goals with a projected timeframe is essential to drive you into taking action and staying committed. They can be short term, such as a new home theatre system, right up to long term goals, such as a holiday home or a round the world trip. Talk to your spouse and figure out what it is you desire and pin it down to specifics.

Plan To Succeed

Imagine if you employed a builder to build your home and he turned up on the first day of work without a blueprint and told you he was just going to wing it from day to day. Who knows what you would end up with? While in some areas of life it is great to be spontaneous, your finances are not one of them. Make sure you plan and get proper advice to help you do it.

Keep A Lid On Your Credit

Credit used wisely is a great financial tool, but far too many people allow it to take control of their financial life, rather than it being the other way around. Make it a goal for the new financial year to take back the initiative. Look to your credit cards first and set yourself a reasonable monthly amount to really make inroads into the one with the highest interest. Once the momentum has started you will be motivated to knock over other debts and tame the credit beast.

Spruce Up Your Super

End of financial year is always a great time to make sure you are maximising your super opportunities. If you are self-employed, see if you can squirrel away extra money to contribute increasing your tax deductions and boosting your retirement savings. If you are an employee, maybe it’s time to talk to your employer about salary sacrificing into super to potentially take advantage of the concessional tax rates and help enhance your future retirement lifestyle.

Tax Benefits On Your Insurance Too

Protecting yourself and your loved ones from the threat of premature death or loss of income through sickness or accident is an essential part of your financial planning, but are there opportunities to do it more tax effectively? With your income protection, for example, if you are eligible, you can pre-pay next year’s premium before the end of the tax year to gain a bigger tax deduction on this year’s income. You can also talk to your adviser about the possibilities of shifting some of your insurances into your super to potentially gain deductibility on your premiums.

Earmark Your Tax Refund

If you are expecting a refund from your tax return, it is easy to splurge it on a luxury or treat that you don’t really need. Why not dedicate it to something more worthwhile that will help advance your financial health, such as paying down debt, boosting your super or applying it toward one of your savings or investment goals. Making the decision before you get the money will help ensure it is diverted the right way and not squandered.

Golden Rules for Wealth Creation

Have you ever considered the possibility of one day being completely financially independent? It may sound like a fantasy to some but the good news is that building wealth is not out of reach. Even with modest resources you can achieve surprising results just by following a few simple rules.

Time Is Your Biggest Ally

No one has ever been disadvantaged by starting their investment plan too early, but plenty have started too late. There will never be an ‘ideal time’ to invest so starting as soon as possible, even if you can only afford a modest regular amount, is a powerful factor in your favour. The key advantage of starting early is that you can access the formidable effects of compound interest. Earning returns on top of returns can make a dramatic impact on your wealth creation over time, as the example opposite demonstrates.

Don’t Try To Time Your Entry

Many people think that the best way to invest in growth markets such as shares is to hold back on investing until it is ‘just the right time’. This approach can seriously limit growth because of the day to day fluctuation in markets. A far more effective strategy is to keep a regular deposit going into your investment plan to take advantage of a concept known as ‘dollar cost averaging’. By making regular contributions you know that at least part of your investment will be buying into an investment market when prices are low, thereby gaining a lot more if markets rise. Of course it also means you will sometimes be buying in when markets are high, but the ‘averaging effect’ you achieve could mean you will generally be better off than if you try to make a single deposit at ‘just the right time’.

Diversify To Manage Risk And Seek Performance

Once your risk profile and timeframe are established, you can then decide on a spread of assets that will best suit that profile to optimise a balance of security and performance potential. Diversification is a key strategy in wealth building. It enables you to seek the opportunities for greater performance, while helping to mitigate the risk of downturns in any one market. This helps to smooth out performance over time. Diversification can take place at several levels.

You can:

  • use a variety of asset classes
  • invest in international markets as well as domestically to seek a wider range of opportunities
  • use the convenience of managed funds to pool together with other investors for more efficient diversification, compared to investing in shares or property directly
  • use a range of managers with differing styles and emphases

If you want to take a closer look at how you can build wealth, talk to us today on 02 9979 2001.