Finance is the domain of women as much as it is men, so it is important to take hold of the reins with all areas of your finances regardless of your sex.
Investing is not just for the rich, investing is for everyone, but what do you need to know before you jump in?
The earlier the better. Investing should be a long term strategy whether you are investing in shares, property or managed funds. The longer your time frame in the investment market, the more beneficial it will be for you. The compounding effect is the idea that you reinvest your earnings so that you have a larger base to earn money from. By reinvesting earnings over the long term, your investment will continue to grow for you, and in turn produce more income. You don’t need a large sum of money to start investing, the important thing is to actually start. Whether you are single or in a couple is no different, it is never too early to start growing your wealth.
Being an excellent saver won’t make you rich. Saving is one thing, but investing is another. Think about it, how many millionaires do you know who got rich by saving alone? Putting away excess cash is important, however you need to invest in order to grow your wealth. Most high interest bank accounts offer around 3% interest. If inflation is expected to be approximately 3% a year, then your interest has only allowed you to break even. You want to aim to be earning over and above inflation to stay ahead of the game.
Diversify. This is the old ‘don’t put your eggs in one basket’ caper. While most people understand the concept, they don’t always realise there are ways to diversify, even if you have a small amount to invest. Property can be an excellent investment however you need a lot of capital to get started and diversification is almost non-existent if you only have one property. Do your research and investigate your options. There are a variety of investment options available to you that have a good mix of diversification for as little as $20,000.
Superannuation is an investment too. Many people neglect their superannuation because access to it seems so far away, but super is an investment just like any other, with the added benefit of a lower tax environment. You should be taking care of your super as much as any other investment that you have. If your superannuation balance is sitting in the default option because you haven’t touched it, then you need to look at it and decide whether it is in line with your overall investment goals.
You may also consider whether making additional contributions may be the best way for you to invest for the future. You may be able to make up to $25,000 worth of concessional contributions into your super fund. This will reduce your taxable income and boost your retirement investment, which is a win in both areas.
Investing can sometimes seem like a scary world, but it doesn’t have to be. Start small, and be consistent, and you will grow your wealth over time. The important thing is to start and make it apart of your life.