Investing is a great way to build wealth and set yourself up for financial security. However, it isn’t a one-size-fits-all game. There are certain things you need to be aware of before you get started (and keep in mind as your portfolio grows). That’s why today, we’re looking at five things all Australian investors need to know:
Tangible Assets Are Your Best Friend
The first thing you need to be aware of is that tangible assets are the most secure option available for any investor. Here, we’re referring to physical assets such as property investment in Melbourne or bars of gold and silver. The main benefit of this approach is that your assets cannot simply disappear as they can in many other cases. However, you’ll still benefit from capital gains, and property investments can be a wonderful source of additional income, thanks to rental fees.
Investing In Your Super Is Great For Current And Future You
The next thing you need to know is that investing in your super doesn’t just benefit you once you hit retirement. Taking control of your super early will certainly improve the situation that you’ll be in when it comes time to stop working, but it can also provide some pretty nifty tax benefits for present-day you.
If you’d like to control all of your investments, you’ll need to switch to a self-managed super fund and engage the services of an SMSF Accountant (otherwise, your fund will handle the specifics for you). No matter how you handle things, contributions to your super are generally tax-deductible, which will have flow-on benefits for the rest of your finances.
The Stock Market Is Great For Long Term Strategies
Trading in stocks and shares is one of the most common investment strategies as it requires far less capital than many other investment avenues (especially with the invention of micro-investing platforms).
While this market is known for being quite volatile, you’ll still tend to see positive growth as long as you make the right investments. Most people are pretty much guaranteed to come out on top, so long as their investment is held for more than 20 years. During this time, you may be able to take advantage of dividends (and associated reinvestment plans) to help grow your portfolio with little to no intervention on your part.
You’re Going To Want A Professional Managing Your Taxes
When you start bringing investments into the mix, dealing with your income taxes gets a whole lot more complex. Not only will you have multiple streams to deal with, but they’ll all be paying (and possibly losing value) at different rates. You’ll need to factor in capital growth profits from share sales, dividend distributions, any losses that you may have made by shuffling your portfolio, and more. So, it’s a good idea to enlist the services of a qualified accountant to ensure that you don’t have any mistakes in your tax return when the time comes.
You’ll Still Want Money In The Bank
Finally, it’s important to remember that you’re still going to need a decent level of liquid assets. This helps prevent you from having to sell your investments if you need to pay for something that’s out of your budget and ensures that you have cash on hand if anything goes wrong for you financially. Plus, funds held in a high-interest savings account are always the most secure form of investment.
Now that you’re armed with this information, your investment journey should be a lot smoother. Follow the tips in this article, and start building that portfolio!