This article looks at the top investment strategies for 2013. But remember – not all strategies will work for your unique situation. Remember to speak to an Infinite Wealth representative to design the perfect investment strategy for your unique needs. Click here to book your free financial health check now.
The thing with strategies (and New Year resolutions) is that they need to be specific and achievable.
Vague: “I’m going to lose weight” or “I’m going to improve my finances” goals are almost certain to fail, whereas specific: “I’m going to drop five kilos by walking an hour before work every day” or “I’m going to cut four years and $60,000 in interest costs off my home loan by paying an extra $100 per month on to it” can succeed because they are clear-cut goals with defined ways of achieving them.
So for Gen Y, my top three strategy tips are:
1. Flick the credit cards! We owe $49 billion on credit cards, with three-quarters of that accruing interest at rates north of 10 per cent.So if you have personal debt, then set a strategy this year to pay it off in full.As a starting point, remove your credit card from your wallet and divide the amount you currently owe by the number of pay periods this year. Commit to paying at least that amount on to your card regularly.
2. Find your super. Yes it’s boring, but according to the tax office there are 3.4 million lost super accounts “out there”, with an average balance of $4800 per account.You could potentially add tens of thousands to your retirement nest egg by finding your lost super, so set aside a few hours and hit the phones.
3. Invest in yourself. As I’ve said before, and notwithstanding the mining boom, those who are degree-qualified will earn a lot more over their lifetime, on average, than those who aren’t. So a few extra thousand invested in your education this year could be one of the best returns you’ll ever make.
Have a great year!
-Justine Davies. Justine is finance editor and commentator with financial research and ratings firm Canstar.
WHOA, dudes! It’s January! Anyone for beach cricket, downing a few frothy ones and cheering congestion-free roads?
Can’t we just bask in the glow of that gnarly second half of 2012, where Australian shares did 16 per cent? No? You’re right. It’ll be June 30 before we know it.
OK, the first strategy involves noting that cash is dead. The Reserve Bank has cut rates to 40-year lows. And more cuts seem likely.
1. Get ahead on your home loan. Keep your repayments high and build up a good buffer.You still need a big stash for a rainy day enough for a 40-day-and-40-night flood of biblical proportions.But outside of that, spare cash might find better returns in investments.
2. Second, test your expenses. Have you done a health check on your mortgage recently? How about your car, health and home insurance? Don’t get taken for granted. It’s a “squeaky wheels and oil” sort of thing. Companies will often drop their strides to keep customers. But you might need to complain or threaten to walk. But don’t just chase a quick saving. Compare quality it’s often worth paying extra for it.
3. And, finally, investment. The five-year investment limbo we’ve been in since November 2007 has got to end soon. And being in the game when it does will be crucial.
Despite global financial woes, Australia’s economy seems in good shape. Shares and listed property had great runs in 2012, but are still way below previous highs.And interest rate cuts and low unemployment should mean that it’s time for some action in residential property this year.
-Bruce Brammall. Bruce is the author of Debt Man Walking and principal adviser with Castellan Financial Consulting.
PLANNING, investment, succession. Those are my three tips for every Baby Boomer in 2013. When you visit a financial planner, most will ask you the same question, “Where do you want to be in XX years time?”.
This is vital it’s the only way anyone will be able to figure out what they need to do to get to that key point. By identifying the end game, you can then work your way backwards and use the last years of your income-producing life to contribute to that goal.
It might sound a bit obvious, but there are so many people who can’t actually identify what it is that they want.
Make sure you’re not one of them.
With regards to investment, for those of you who are still working, this is a vital time. What are you doing to add to your super contributions? What salary sacrificing or other plans do you have in play to make the most of these last working years? What are you invested in and is it performing the way you want it to?
We’ve seen the risks involved with being overly reliant on equities and not being properly diversified. So the strategy here is to get active and make sure your investments are working for you. If not, now is the time to make a change.The last strategy you need to put in place is the distribution of your assets when you pass away. This is something that too many people ignore until it’s too late.
Don’t be one of them. Do your succession planning now while you are of sound mind and body. The planning you put in place can always be altered, but now is the time to get the foundation laid to give both you and your family peace of mind.
-Mark Bouris. Mark is the executive chairman of wealth management firm Yellow Brick Road.
2013 is the Chinese Year of the Snake. The Snake is keen and cunning, intelligent and wise just like many retirees.
It is said that the family of a Snake will never go hungry and that the Snake will work hard to make certain things turn out exactly as planned. So if you also want to ensure certainty, here are three strategies to go about it.
1. Have a stash of cash. All the generations need access to cash but retirees particularly need cash for living expenses, as there are no wages or salaries flowing into bank accounts any more.If the GFC has taught us anything, it is that cash is king in difficult times. Having 2-3 years of living expenses in cash enables you to sit back and leave growth investments alone without having to access them, when markets are down.
2. Grow an income stream. The official cash rate has fallen over the past 12 months to 3 per cent. Indications are that rates may fall further. As such, term deposit rates have lost their gloss.For me, carefully selected high dividend yielding shares are far more attractive and more likely to give a higher rate of return. The big bonus is the franking credits, which can help to minimise any tax or can be refunded if not used.
3. Expect the unexpected. Whatever has been predicted by economists, banking gurus and weather forecasters may or may not happen.There is a reasonable probability though, of something completely out of left field happening. At a time like this, markets and minds will be thrown into a tailspin. When this happens, remember that this time it isn’t different.
If you have the dot points above, then you can ride out the storm with cash in your pocket and a pretty good chance of a continuing income stream, even if it is slightly reduced. Have a very happy and healthy 2013 and think like a Snake.
-Kerrin Falconer. Kerrin is a finance writer with 15 years of financial planning experience.