Seven Rules For Building Wealth In The Sutherland Shire

building wealth in the sutherland shireCreating a safe financial position and building wealth in the Sutherland Shire, requires a constant focus on a number of important rules that are set out below.

1.    Earn Well To Build Wealth.

You may be on a high salary but are you able to save or do you spend as much as you earn? Expensive holidays, schools and tuition for the children and expensive cars to keep up with the neighbours? Do  you know that you can never save sufficient money from your savings as poor interest from the banks and taxation will eat up any gains.

No one ever got rich from working hard, they got rich from making someone else work hard. By using your high income you can grow wealth in the Sutlerland Shire through a variety of investment options which every investor should know about.

Here’s the trick to building wealth in the Sutherland Shire, no one can give you the full picture because they are either restricted by the law or their speciality. Financial planners cannot advise on real estate or real estate agents cannot advise on financial planning. Also they all have their speciality and only work in their select fields.

2.    Focus More On Wealth Creation Not Saving.

Given good income, the largest single potential is to save well. Obviously, if you are spending everything, you earn, you are not building wealth.  The magic of time and compound interest is not widely appreciated. Did you know that the value of $10,000 invested with an annual average return of 10% for 50 years. The answer is a shocking $1,173,908. So saving a decent amount each year really does contribute to building wealth. But were do you earn 10% in a savings account and the taxation will take almost half of that.

Building wealth in the Sutherland Shire does not have to start big. Go to any investment seminar and you will find they work on borrowing large sums which gives them high commissions. For less than a $1,000 you can start building up a share portfolio or for $150,000 you can buy an property investment which will give good returns.

Investing starts with an attitude to risk. Are you willing to make the start but afraid you will lose everything. Unscrupulous advisers will tell you that you can have a million dollar portfolio  of investments but they don’t tell you that you may also have a million dollars in debt at interest only which you will have to find in ten years time when you achieve your returns.

3.    Building Wealth In The Sutherland Shire? Start A Budget.

Unless you are an accountant or financially gifted,  most people do not know where to start. But just the simple act of sitting down and looking at your income and expenses will show you where and when you can save. However sitting down with a trusted professional can save you time and money. If this person is a professional and properly qualified then you can be lead through the financial maze and come out with a tangible savings or investment goal.

The choice is yours.

Do you really want to save or invest?

4.    Avoid The Twin Temptations Of Fear And Greed.

One investor once said that the returns were to good to be true and it was. Returns can not be guaranteed. Do your home work and do not put all your eggs in the one basket. Ask yourself ‘What would happen if I lost the lot” would you be in trouble? Don be too greedy unless you can afford to lose the lot.

Remember the investor advisor is not putting his money in the investment but yours.

5.    Invest Wisely.

Know what you want to invest in not just to invest. Knowledge is power. Seek out information about the investment. There are lots of reputable advisors who will help. If you want to invest in shares then look to the Stock Exchange, banks, etc.
If you want to invest in real estate there are many real estate agents who have the information and will give you good advice.

Never make a decision off glossy brochures or the advice from your friend at the BBQ. If the person giving the advise is a registered professional he  or she has a legal and ethical responsibility. Also they are most likely a member of a professional association.

6.    Get Good Advice.

That’s where we come in! People reading thus far may feel daunted and ask who has the ability to recommend on what types of assets to buy and to construct a widely diversified portfolio of investments. My usual answer to help my customer to find a good financial planner. The big banks all provide access to financial planners and, there are also an increasing number of more or less ‘independent’ planners or advisers. Standards of professionalism are mainly developing, yet sadly there are still some deceitful or inexperienced people in the business.

In selecting an adviser we are very careful to inspect credentials and to develop the basis on which the adviser is being paid. It is not recommended that you have to pay up-front fees, and if somebody makes an offer like ‘free’ advice in return for placing your money into a fund with a large up-front fee (‘load’ is the technical term) you should disengage immediately.

The better advisers will ask for an explicit fee and announce any other basis of payment, like a portion of the yearly fee that you pay the fund manager of choice.

For those who don’t have the time or knowledge to create and maintain their own portfolio, there are professionals who are competent enough to do it for you. There are also associations that monitor the people, process, culture and skill of the investment teams.

So it is possible to select a professional manager that proposes diverse suggestions of investments fitted for your individual circumstances and preferences. You can also pick more than one investment manager, and relevant organizations will keep track of your records and the performance of the several funds.

There are even firms that specialize in choosing groups of investment teams, mixing teams with different styles. This minimizes the danger attached to the fact that even expert single manager will have the occasional bad year. This is diversification piled on variation, a very cautious strategy that appeals to some people.

7.    Have Fun.

The more you earn, the more you can save, expand your risks and don’t try to be very clever at picking individual investments or changes in market conviction. The rules so far may seem rather old-fashioned, even boring. The saving grace is that there is one last rule that will make the others bearable – have fun.

For many people, it makes sense to allocate a little proportion, say 10%, of their wealth to fun ventures.

One person might allocate all the fun money to buying art or trading pork belly futures on the futures exchange. A more cautions punter can spread his risks with a portfolio of Internet or Biotechnology stocks. Others may play the markets, buying low then selling high.

Whatever one’s choice is, the reasonable rule is to allot only money which you can afford to lose to such activities.

The overall message is easy. The person who is aiming to be rich:

  • Saves a lot from an early age.
  • Chooses a combination of investments that suit his or her age, lifestyle and attitude to risk and lets time and compound interest work its magic.

Of course if one has the time and expertise to play the markets, selecting winners, going with the booms, selling near the peak and purchasing it back after crash, correction or crumble, one might come out ahead. This game is fought with risk. However, it may be best left to the brave-hearted and those who have the financial means to be largely wiped out from time to time.

Punting with a small proportion of your portfolio will let you sleep soundly at night whilst enjoying plenty of healthy excitement during the day.

Call me on 02 9523 9550  to find out more about building wealth in the Sutherland Shire