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Personal finance – 9 things you’re probably not doing but should

Financial freedom is a dream shared by many.  There are priceless tips on how to be financially independent.  The following are some of the financial planning tips that you will find useful in 2014:

Pay Yourself First

By this I mean set aside a portion of your earnings every time you get paid or achieve investment returns.  The sooner you acquire this habit, the more likely you are to achieve your dream of financial independence early on in your life.  Arguably, the habit of saving is the biggest single predictor of financial independence.

Make Smart Investments

Firstly, you need to maintain liquid savings equivalent to 3 to 6 months of your living expenses to cushion you from unforeseen events in life. Secondly, you need to seriously consider sacrificing your salary to your super fund.  Thirdly, you need to open a discount brokerage account and start making regular investments directly into individual shares using the money you are left with.

Be An Educated Client of Financial Services

The financial services industry is awash with charlatans and unscrupulous folks with only their interests at heart.  You need to make educated decisions while seeking financial services. Questions that you need to ask yourself include: How do they get paid for the services they provide? Do they have financial interest in what they are trying to sell to you? Should you have any doubts on whether or not their independence is compromised, do not hesitate to seek financial services from another provider.

Create A Portfolio For All Seasons

The investing environment is never static.  There are booms, slumps and recoveries for different sectors of the economy.  You are better off with a solid plan that will take you through both the turbulent and the good times.  There are various insights on creating such a portfolio.  To decide what percentage of your portfolio should be in stocks, subtract your age from 110. For example, if you are 30 years old, 80% of your portfolio should be in stocks. Secondly, only invest in stocks if you are ready to sacrifice that money for at least 5 years.  Thirdly, choose an index tracking fund if you’re not comfortable with adopting a hands-on approach to managing your investments. Fourthly, avoid high fee funds. Lastly, high yielding fully franked dividend stocks are good candidates for super funds.

Create A Diversified Self Reflective Portfolio

A basic investment portfolio should boast of 15 to 25 positions.  When investing in stock, do not exceed 10% for a single counter. For a single sector, maintain the maximum holding to 30%.  Your portfolio is a mirror of your personality. It should say something about you. Invest in products and services that you are interested in and that you know a great deal about.

Avoid Over Housing

That’s right, do not be tempted into the extravagance that is buying several homes in a short period of time. Do not buy a home unless you are ready to spend at least 7 years in that area.  You also do not want to commit all your hard earned money to expensive mortgage repayments.

Be Responsible Enough To Mind About Your Beneficiaries

Ensure that you do have an up to date list of beneficiaries in your super.

Have These Two Important Documents

If you are an adult with substantial savings, sacrifice a few hundred bucks to get a professional to draft you a will and an enduring power of attorney.  They are invaluable.

Start Your Business Early In Life

The best lessons on investments and life in general are best learnt from running a business, be it a success or a failure.  The set of skills you will get are invaluable.

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Our response to limit the spread of COVID-19

  • As COVID-19 continues to spread, we would like to take a moment to let you know what Financial Spectrum is doing to respond.

    While we haven’t been directly affected with any confirmed cases, we are taking all reasonable precautions to remain safe.Our priorities are:

    1. Keep our staff and clients safe
    2. Stay fully operational in our service delivery and continuing to manage your financial affairs
    3. Play our part in minimising the impact on our community against the spread of COVID-19

    Financial Spectrum has the technology, infrastructure and systems to continue business as usual remotely and our staff will now be working from home.

  • You should notice no change to our service, with the exception that we are encouraging our clients to meet via video call, rather than face to face, unless requested. We will be contacting all clients with meetings booked over the next two weeks with instructions for a video call.This is an evolving situation and we will continue to monitor developments. We will keep you informed of any material changes to our approach.

    These are unprecedented times and we understand that many of you will be feeling unsettled about your finances. We would like to assure you that we are open for business and are here to help you. If you don’t have a meeting booked but would like one, or if you have questions, please contact us at info@financialspectrum.com.au or on
    02 8238 0888

Brenton Tong

Managing Director

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