Unsexy Financial Strategies
Can Be the Most Successful
Building Financial Resilience through consistent habits will outperform the perfect investment. Wealth isn’t usually built by exciting decisions.
Wealth is built by disciplined habits over time that most people overlook because they aren’t exciting or considered boring and unsexy.
Everyone wants the next investment winner. However, investing actively with your future goals in mind early can hugely impact your long-term outcomes.
By this I mean making small sustainable changes to how you manage your money can make you feel more in control and ahead of the game.
Most people who retire comfortably didn’t get there through sheer luck, speculation, praying or chasing the latest trend. They got there by consistently doing boring things, year after year.
They got there by following these 5 “boring” and proven strategies:
1. A Robust Budget
Following a robust budget so your money is working for you.
Having a separate bills account offsetting your mortgage takes the stress away when bills arrive, as you already have the cash allocated.
No mortgage no problem – still having a bills account helps to show lenders your capacity to repay a loan.
2. Making Additional Super Contributions
Making regular additional super contributions, even if they’re small you are accessing two proven strategies.
First being dollar cost averaging – buying investment units at different times in the market allows you to access potential gains by “buying well” on any given day.
The second, compounding interest. The concept of interest on interest over time will passively increase your super.
3. Paying Your Home off
Paying down your mortgage and entering retirement debt-free.
This is a no brainer but should be a number one priority of any home owner. It significantly reduces the amount of super you’ll need in retirement.
A non-home owner will potentially need double the super for the same lifestyle.
4. Save Income increases
Increasing savings every time your income increases instead of increasing your lifestyle.
If you are lucky enough to receive CPI-indexed annual income increases (or any regular income increase) – squirrel it away to your mortgage or super or both!
Your future self will thank you
5. Remain invested!
Staying invested through market ups and downs rather than trying to time the market. This is a BIG one!
As much as we educate people to stay put and not crystallise their loss – its one of the biggest concerns of clients when markets go down.
Crystallising the loss means selling out when markets turn, it is best to hold tight and allow the market to recover.
Most people don’t know that one of the strongest retirement messages is the paid-off home effect.
The Association of Superannuation Funds of Australia (ASFA) Standard assumes home ownership in their calculations as housing costs are one of the biggest determinants of retirement success – control and comfort.
With a home unencumbered (paid off) ASFA estimates a couple would need $730,000 in combined super and a single person $630,000 alongside ideally a part Age Pension. https://www.superannuation.asn.au/media-release/asfa-retirement-standard-four-in-ten-australians-overestimate-how-much-they-need-in-super-for-a-comfortable-retirement/
As much as we like to appear as financial magicians – we cannot undo lack of budget, no additional contributions to super or not paying extra to your mortgage especially if you are over 55!
Use time as your friend especially if you are a conservative investor. Implement the above and you will more likely have a comfortable and stress-free retirement.
The boring, unsexy plan often wins.
What’s the most unsexy strategy you have implemented that is paying dividends for you now?
Any questions about this article, we are always here to help.
General Advice Warning
The information on this website and the links have been prepared for general information purposes only and does not take into account your personal objectives, financial situation or needs. It is not intended to provide commercial, financial, investment, accounting, tax or legal advice. You should, before you make any decision regarding any information, strategies, or products mentioned in this email, consult a professional financial adviser to consider whether it is suitable and appropriate for you and your personal needs and circumstances.