It’s no secret that Aussies enjoy the occasional harmless gamble in attempts to win big. Every November for example, we as a nation gamble millions of dollars on one short horse race, so it seems pertinent to highlight investment tips and what to look out for to better the odds when it comes to our personal finances.
- Trying to time the market rather than time in
It is simply impossible to guess when the market is at a peak or when it is at the bottom of a decline. Investing in shares or property are long term investments, in most cases more than seven years. Investors are better off contributing consistently to their investment portfolio or superannuation fund rather than trying to trade in and out in an attempt to time the market.
- Reacting to the media
Don’t push the panic button on short term volatility and news. This year, we have had markets dominated by political influences both here and abroad. We have seen changes and uncertainly around the federal budget and with Trump winning the US Election which has created volatility and uncertainty to global markets.
- Not getting advice
Increasing your financial portfolio can be difficult to grasp, especially if you’re a first time investor and mistakes can be costly. Before you commit to making any investments, consider seeking professional help. The ideal financial professional and financial service provider not only has the ability to identify problems but will also offer ideas and solutions to solve them.
- Letting emotions get in the way
Have you got adequate insurance? Do you want to involve your spouse in planning your finances? A good financial adviser is unbiased and looks out for your best interests, so that they can help you construct a plan that works no matter what the answers to these questions are.
- Not understanding tax
A big mistake most people make is not understanding tax paying obligations. For instance, people who earn $60,000 think they are taking home $5,000 a month where as they are taking home less than $4,000 per month. It’s your employer’s responsibility to deduct tax from each pay and send it to the Australian Tax Office (ATO) on your behalf, but it’s crucial to be aware of how much tax you pay. I recommend checking each pay slip or reading up on Australia’s taxing system to get a better understanding of the position you’re in after tax.
- Having no idea about where your money goes
Whether you have a little or a lot, you will feel more secure and in control if you simply track where your money goes. Tracking your spending helps you understand your daily money habits which can lead to managing debt and savings.
- Not doing due diligence
There are many websites, such as Adviser Ratings, where you can check whether the people managing your money have the training, experience, education and ethical standing to merit your trust.
- Not saving enough
It’s common to think that the key to investment and retirement success is having the perfect investment strategy. So if you’re serious about reaching those personal goals, spend less time trying to create the perfect investment plan and more time figuring out how to save more money.
- Investing in things you don’t understand
I find this a major frustration with clients, most people who are frustrated with a particular investment they own didn’t totally understand it when they first got in. In addition to that they do not have an exit strategy or are relying on variables outside of their control to cash it in.
- Thinking you don’t have enough money to invest
Investing isn’t just for rich people. You can start investing on any budget. Try and eliminate high interest debt such as credit card debt and once that is done put a savings plan in place and engage a financial adviser. Don’t sell yourself short. If you have long-term goals that matter to you, it’s worth getting started now.
About the author
Scott Haywood CFP is a Platinum Adviser with 106 client reviews with an average customer rating of 95%.
This article first appeared in Yahoo 7 Finance, on 7 November 2016.