Create and build (aged 25 – 45)

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If your New Year’s resolution is of a healthy financial future, now is the time to take action. Spend some time going through our simple life-stage checklist below to make your finances as healthy as they can be. 

 

Create and build (aged 25 – 45)

This is a great time to get your finances off to a flying start. At this stage of your life, you have an extremely valuable commodity at your disposal – time. Being a long way out from retirement means that saving, even small amounts, can make a big difference through the power of compounding (earning interest on interest).
As you progress further through this lifestage, you’re likely to take on a significant amount of debt – primarily through a mortgage. A key focus should be paying down this debt quickly. But don’t discount the opportunities presented by other forms of investment.
Consider some of the following strategies:
Budget

  • Prepare a budget that you can follow.
  • Include a plan to spend and save.
  • Know what you are saving for.
  • Use pay rises to fund your regular savings.

Manage your debt

  • Reduce unnecessary spending.
  • Pay off your credit card at the end of every month to avoid high interest charges.
  • Consider consolidating credit card debt into a personal loan.
  • Aim to pay down your non-deductible debt (mortgage).

Maximise your savings

  • Transfer accumulated savings into investment options that are in line with your investment strategy.
  • Consider using a mortgage offset account to help reduce loan interest while giving you access to cash.
  • Consider using a line of credit in addition to your mortgage for investments.

Add to your super

  • Consider salary sacrificing into your super.
  • Check to see if you’re eligible for the annual Government super co-contribution.

Reduce your risk

  • Make sure you have sufficient death, total & permanent disablement (TPD) and income protection insurance.

 

 

Manage and maximise (aged 46-65)

This is normally when most people are earning their greatest income. Your career is likely to be reaching its peak and your salary hopefully reflects this. At the same time, you may find that some of your expenses are decreasing. The kids may be starting to leave home (hopefully) and you may be reaching the end of your mortgage.
Given that retirement is just around the corner, it’s vital that you use this period of increased income/lower expenses to set yourself up for retirement. Now more than ever you need to be sure you have the right insurance cover in place. All your retirement plans will quickly unravel if you find yourself unable to work for an extended period and you don’t have insurance to fill the gap.

Related:  Become Wealthier, Healthier and Happier in 2015

 

Consider some of the following strategies:

 

Budget

  • Prepare a budget that you can follow.
  • Make plans once your mortgage is paid off.

Super

  • Consider salary sacrificing into your super.
  • Make the most of your concessional contribution cap.
  • Check to see if you’re eligible for the annual Government super co-contribution.
  • Consider splitting contributions with your spouse.

Minimise tax

  • Consider a transition to retirement strategy which can reduce tax and boost super.

Investment strategy

  • Calculate how much you’re likely to retire with and whether it will be enough.
  • Review your investment strategy against your current circumstances.
  • Ensure you have the right balance of risk and return.

 Reduce your risk

  • Make sure you have sufficient death, total & permanent disablement (TPD) and income protection insurance. 
  • Consider additional insurance options – trauma, critical illness, business expense.

Estate planning

  • Ensure you have a valid Will in place.
  • Make a binding nomination within your superannuation or pension account.
  • Put appropriate powers of attorney in place.

 

Enjoy and transfer (aged 65+)

It’s time to enjoy the rewards for all your hard work. You’re aiming to lead a long and healthy life, so make sure that your finances are going to keep pace.

Reconsider your investment options in your super. You need access to your money so you may want to reduce the level of risk in your portfolio. There may still be a place for some higher risk/higher return assets that are going to help your portfolio grow over the long term. It is important to get this balance right – your superannuation investments may need to fund your next 20 years or more.

Make sure you’re taking advantage of all of the government benefits you’re entitled to. Having built a nest egg for yourself, it’s important that you carefully plan what will happen to it when you’re not around by implementing an estate plan.
Consider some of the following strategies:

 

Budget

  • Prepare a budget that you can follow.
  • Review spending in light of your reduced income.
  • Downsize where appropriate.

Investment strategy

  • Review your investment strategy against your new circumstances.
  • Ensure you have the right balance of risk and return.

Estate planning

  • Ensure you have a valid Will in place.
  • Consider making a binding nomination within your superannuation or pension account.
  • Put appropriate powers of attorney in place.
  • Consider aged care options.

Centrelink benefits

  • Ensure you’re receiving all the benefits you’re entitled to.
  • Structure your income and assets for minimal impact on your entitlements.

 

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What’s next?

You should consider your own personal financial circumstances and add in any steps that address your particular needs. The key to financial success is being able to access the right kind of financial information and advice that is tailored to suit your circumstances and your financial needs. Once you have a plan in place, remember to review it with your wealth adviser at least once a year. You need to know whether you’re still on track and make any changes as your circumstances change.

You can get help with this by working with a trusted Chan & Naylor wealth adviser. Feel free to call 1300 99 77 34 to discuss your personal circumstances or better still complete our 5 minute financial health questionnaire.

Alternatively, for any general enquiries please complete the form below.

 

General Advice Disclaimer – The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. If any products are detailed on this website, you should obtain a Product Disclosure Statement relating to the products and consider its contents before making any decisions.

 

 

Please submit this form and a Chan & Naylor wealth adviser will contact you 

 
 
 
 

Warning

The material on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs. Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this website are provided for illustrative purposes only.

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