Your Money Manager

The Importance of Understanding Risk In Your Investing!

The last few weeks have seen quite a lot of volatility in world share markets and in times like these, many people can panic and make short term decisions that may impact their long term results.

Understanding the level of “risk” you are prepared to take when it comes to investing your money, and the likely long term outcomes of this risk, can help with your financial planning and making sure you don’t just react.

Make sure you seek professional advice and understand where your money is invested and your approach to risk. It could make a big difference in your wealth building for the long term!

Focusing Your Financial Plan On Building A Second Income!

One of the most basic steps in financial planning for most of us is to get our money to work for us so eventually we won’t have to work for our money.

When we start in the workforce, our primary income from our jobs obviously helps us cover our expenses and allows us to provide for ourselves and our families.

The sooner some of our primary income can be directed towards building a “second income” from assets such as rental income from properties and/or dividends from shares, the sooner we can have choice about when we retire or when we step back from work.

In Australia, we’re fortunate to have the superannuation system that is effectively forced saving and investing that we can’t touch until we get to 60+ years of age. For many people, if they didn’t have super, they wouldn’t have anything once they finished work.

It’s a great time now with only being a couple of weeks into 2025 to look at how you can start, or continue, to build your assets so you can work towards growing your “second income”.

With enough time, work and planning, one day your “second income” can be enough to become your primary income. From there, your retirement and work choices will be completely up to you!

3 Tips To Help Deal With Rising Interest Rates

As expected, and for now the 9th time in a row, the Reserve Bank of Australia has again raised the official interest rate.

There is definitely real concern now for many Australians about when the rate rises will stop and how much impact it will have on their mortgages and cost of living.

While we can't control what decisions the RBA makes, there are some steps you might be able to take now to help ease the pressure:

1) Put a budget in place - while it might be annoying to do, sitting down and going through your bank statements can help you see where your money is going and where any reductions could be made.

2) Speak to your mortgage broker - don't just sit and accept the rate rises on your mortgage, speak to your mortgage broker about your current rate and your options for refinancing and/or a better rate.

3) Get tough on your spending - sometimes you just have to get tough on your own spending and unwind any habits that might be costing you money you can't afford to spend. By reducing or eliminating any impulse buying, it could help to get some savings back in your bank account.

We don't know how many rate rises or changes we will see this year but taking little steps to improve your savings and cashflow could help you to manage the increase in costs to come.