One of the world’s most admired investors, Warren Buffet, is famous for saying “Don’t save what is left after spending; spend what is left after saving.”


While this approach may not always be possible, even investing just a small amount regularly can make a big difference over the long term.


If you are accumulating wealth…

When looking to start building your investments, one of the easiest ways to get started is through a regular investment plan into a managed fund.

There is a managed fund to suit different risk profiles, with most offering the ability to have a regular amount, starting at $100 per month, invested automatically. This approach means you will get used to not having the extra money, while you watch your investment balance grow.

This type of strategy is popular if you have a particular savings goal, such as a home deposit, starting a new business or taking an overseas holiday.


If you have a family….

Many new parents immediately start thinking about the ways to save for their children’s future education expenses. One tax effective way to do this is through regularly investing in an insurance bond, which is similar to a managed fund but taxed differently.

Insurance bonds allow you to put in up to 125% of your previous year’s contribution, with earnings taxed at a flat 30% – which provides an immediate tax benefit if your tax rate is higher than this. However, the real benefit with insurance bonds is if you hold then for more than 10 years, as all withdrawals from the bond are then tax free.
The sooner you start, even if it is just a small amount, the better off you will be when it comes time to pay hefty school fees.


If you have a mortgage….

With home loan rates now at all-time lows, making additional payments can help reduce interest and clear your mortgage earlier than if interest rates were higher.

From an investment perspective, if your home loan rate is currently 4.50% then that is the after-tax return that you receive on any additional payments. This is much higher than the rates offered by savings accounts or term deposits.

You can take this “investment” idea one step further by setting up an offset account linked to your mortgage. Each time your salary is paid into your offset account, you are effectively “investing” in your home, as the balance in your offset account helps to reduce the amount of interest you pay.


If you are a pre-retiree…

Increasing your contributions into super, on top of what your employer already provides, is an easy and tax-effective way to increase how much you will have for your retirement.

This can be done through salary sacrifice where additional super contributions are taken out of your gross income before tax is calculated. As per 2018-2019, the current rules allow you to contribute up to $25,000 for all age groups.

Employer contributions are included in this amount, but it is still worth considering ‘topping-up’ your super to your allowable limit as you move closer to retirement.

You are able to carry forward your unused concessional contributions cap space amounts from 1 July 2018. The first year in which you can increase your concessional contributions cap by the amount of unused cap is 2019–20, but only if you have a total superannuation balance of less than $500,000 at the end of 30 June in the previous year. Unused amounts are available for a maximum of five years, and will expire after this.


Let us help…

Investing regularly can have a positive impact on your financial situation, no matter your income or age.

We can work with you to create an investment strategy that, over time, will help you to meet your long-term financial goals and objectives.

To find out more about how we could help you, please CONTACT US for an obligation free meeting!!


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Disclaimer: This editorial and the information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. The views expressed in this publication are solely those of the author; they are not reflective or indicative of Licensee’s position, and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author. RI Advice Group Pty Limited ABN 23 001 774 125, AFSL 238429.