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7 top tips for wealth creation

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When you’re just starting out on your wealth creation journey, it can feel like you have a mountain to climb. Yet the most critical things you’ll need to begin wealth creation are your desire to get ahead financially, a regular income, some assets – and a little bit of expert advice.  

Your personal wealth creation process begins with understanding your current position, having a clear picture of the future you want to create, and then putting in place a realistic pathway to get there.

In this blog post, HM’s wealth creation team share their top seven tips for wealth creation.

1) Make sure you fully understand your current position

Of course, when you’re just getting started with wealth creation, it’s quite possible that you won’t have an accurate idea of your current financial situation.

That’s why it’s important to begin your wealth creation journey with a “self-discovery” stage to make sure you have the full picture of your finances.

Take the first step towards your ideal future

At this stage it’s important to ensure you're taking an objective look at your finances. Try and take the emotion out of the equation (as much as possible). Seeking help from a qualified financial adviser can certainly help with this.

2) Decide on where you want to be in the future

A critical stage of the wealth creation process is nailing down your priorities from among all the potential goals and dreams that lie ahead in your financial future. 

With a clear picture in mind of where you want to be, you’ll find it’s much easier to choose from the many wealth creation options that are available to you, to ultimately make your goals a reality.

If you have a spouse or partner, it’s important to include them in this process so that you can work towards your common goals, hopes, and aspirations for your financial future.

A conversation with a trusted financial adviser can help you determine the timing and financial costs of your goals, so that you can see a realistic picture of your options.

3) Establish the best structure to achieve your financial goals

With your financial goals squared away, you can move on to thinking about the best structure to help get you there.

One important piece of the puzzle is your home loan structure. Take care to choose a loan that gives you flexibility and control around how you pay off your debt, and also how you can access your equity to use for investing.

To help you stick to your spending plan, you can set up automatic drawdowns from your main bank account to your “bills & living” account. That way, you’ll avoid the possibility of spending more than you should each week, and preserve more of your income to be saved and invested.

4) Maximise the efficiency of the assets you have

Money you leave in the bank just lazes away, earning only what the bank decides to pay you. It’s when you start investing that you truly get your money working for you.

Similarly, the home equity you’ve built up is an asset that you’ve earned, usually over years or even decades. Don’t let it simply sit there! Instead, unlock this equity and use it efficiently by investing. 

Superannuation should be one of the cornerstones of your wealth creation strategy. By creating investments outside of your super to enhance or supplement it, you can improve both the flexibility of your investments and the wealth you can accumulate.

You should also check your asset allocation and find out if your super is invested appropriately for your age and career stage for maximum efficiency.

5) Stop saving and start investing

Even if you’re spending less than you earn each month and saving the difference, your money could still be used more efficiently.

Even though cash has minimal risk, it’s an asset that will enjoy minimal or no growth – and won’t even outpace inflation. That’s why it’s important to spread your money across investments that are:

  • Blue chip
  • Have a proven track record
  • Will grow in value
  • Can be easily converted to cash, and
  • Generate an appropriate level of income.

Generally your investment strategy should consist of an initial lump sum investment from your home equity (and/or cash), along with regular additional monthly sums that you invest.

6) Protect yourself against financial hardship

Perhaps the most critical aspect of making sure you build your wealth with a plan that works for you, is managing risk and the unknown.

That means maintaining a buffer, or margin, to ensure you have ready reserves you can draw on if you run into difficulties with your cash flow (such as a redundancy, unexpected medical expenses, or other problems).

It also means taking out sufficient insurance cover to protect yourself against unfortunate events that could otherwise befall you, your family, or your assets.

The secret is to only buy the insurance you really need, and not what insurance companies want to sell you. That way you’ll not only have better protection, you’ll enjoy bigger savings too.

7) Monitor your strategy & cash flow

Creating wealth with a customised plan is never just a matter of “set and forget”. So ensure you are proactive in monitoring your strategy and debt balances, and making changes where necessary.

Your finances will never increase in value simply in a straight line. There’ll be natural fluctuations along the journey.

Keep an eye on your superannuation performance regularly. If your fund isn’t performing, look around for one that could bring you better returns.

Meeting with a HM financial adviser

Talk to Henderson Matusch for help with wealth creation

Financial planning can be complex. That’s why at Henderson Matusch we focus on developing flexible strategies that adapt to life’s ever-changing circumstances, so you can achieve your planned goals no matter what life throws at you.

To talk to a Henderson Matusch financial expert about your needs, simply call us on (07) 3229 3688 or fill out the simple contact form here. 

Topics: wealth building

Posted by Henderson Matusch on Aug 7, 2018 9:30:12 AM

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