FIVE Keys To Building Financial Success

Ok….let’s all agree that money/wealth comes with some level of stress. These stresses are not the same for everyone. Broadly speaking however we can narrow it down to:

  • How to build wealth – Save money from cashflow, accumulate assets
  • How do I increase my income or earning capacity?
  • For some there is even stress around how do I spend my money. A problem some people would like to have and not one we are addressing here. But, let me assure you, this is a real problem for a very small percentage of the population.

I spent almost 20 years working within the investment advice space, 8 years of that was running my own firm. Withstanding that, I, like many others, have had and still do, experience money/wealth stress. But what are my FIVE Keys to start improving your financial position. Ways that when adopted and understood will help you manage those feelings of stress. Some….may not be what you expect.

  1. Do not compare yourself to others. Ok, this is one you may have heard me speak about in the past. And, perhaps one you did not think would come in the top 5, but, it is critical. Firstly, you need to be very clear on what ‘success’ looks like to you. Create a crystal clear image of the life you desire and the cost of the life. The key here… not compare yourself to anyone else around you. You do not know everyone else’s situation, their goals, their situation, so don’t peg yourself against them. The old, ‘keeping up with the Jones’’. This desire to replicate another’s life will often cause un-necessary stress. Swim your own race and focus on what matters to you.
  2. Ok, let’s bring it back to numbers. Let’s get quite specific…..when it comes to investing, how tolerant to volatility are you? Over time, many portfolios come back to market average. What do I mean? Very few beat the market. You can pick all the speculative stocks you like hunting big percentage returns, but you need to be comfortable with high levels of volatility (stress) and know that not every stock will be a winner. For the one stock that does 300%, there may be nine that are flat or lose ground. Buying an index fund that replicates what the broader market returns are, is a more conservative way of building gradual growth over time.
  3. Diversification. A buzz word for so many financial advisors, but you know what, it’s true. It’s very rare that EVERY asset class performs well at the same time. Therefore putting all your eggs in one basket is a risky strategy. You can go all in on AUS equities, but what if the AUS market crashes? Then so does your wealth. You have to have a very high conviction, high risk tolerance or some sort of insider knowledge if you are going to go all in on the one asset class. I would suggest spreading your investments around. E.g. AUS shares, global shares, property, cash, crypto. These are the most commonly known assets today. How you do this is a discussion to have with an advisor. Key, spread your risk and cash.
  4. Invest in a tax effective manner. Now, disclaimer, this varies depending on your personal situation, but what I am referencing here is:
    1. Utilising superannuation as a vehicle where appropriate.
    2. Utilising the equity in a property to borrow funds and invest with these monies making the interest expense tax deductible.
    3. Reviewing what structure (vehicle) may be best in your situation. It may not be best to hold it all in your own name. Look at family trusts and companies.
  5. Most of us would love more income right. But how do we do it? Well, there are a few areas you could look at:
    1. Upskill or re-educate. This makes us more desirable to employers and opens areas of further opportunity and income.
    2. Invest in assets that generate you an income. Common examples are residential property that can be rented out. Australian shares that pay a dividend.
    3. Turn your hobby into a side hustle. Love collecting basketball cards? Love surfing….start taking people for surf lessons. Etc. Etc.

Our wealth journey comes with its challenges and stresses. The obvious suggestion not mentioned above is to review your expenses, but let’s leave that for another day. I suggest you review and reflect on the above. What can you implement? I also encourage you to speak with a financial advisor. Like coaching, an advisor can support and guide you. Financial stress is real thing.


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