Guide to Building Wealth – Forbes Advisor Australia – Forbes
There’s no shortage of get-rich-quick schemes, from buying into the latest crypto coin or flipping a huge portfolio of investment properties.
However, don’t be fooled by promises of ‘easy wealth’—there is no such thing as a sure-fire, guaranteed return on investment and the vast majority of Australians who gamble their savings on risky schemes end up losing their money.
Sometimes these ‘investment opportunities’ are little more than glorified Ponzi schemes, offering eye-watering returns to existing investors funded by money from new entrants. As the Australian Securities and Investments Commission (ASIC) notes, they all collapse eventually, often with devastating results for Aussies who ‘invested’.
Instead, spend your time learning how to build wealth over time, which requires you to make an investing plan and adopt a long-term mindset. Follow these eight simple steps to build sustainable wealth.
1. Start by Making a Plan
Building wealth starts with making a financial plan. That means taking the time to identify your goals and map out how you can accomplish them.
Engaging an experienced and reputable financial advisor is a great way to begin building wealth. It’s a more expensive option, particularly for those who are just starting out, but choosing an advisor who has an Australian Financial Services License is essential. The Australian Securities and Investments Commission’s (ASIC) Moneysmart site offers detailed tips on finding the right adviser for your unique financial situation.
Shopping around for a robo-advisor platform that also provides access to financial advisors may be a more affordable option. Robo-advisors offer a cheaper alternative to face-to-face financial advisors by using algorithms to create a Statement of Advice and investing your money according to your risk appetite and needs.
There are now a number of platforms operating in Australia, including, but not limited to, Six Park, Spaceship Voyager, Stockspot and InvestSMART.
2. Make a Budget and Stick to It
Plenty of people dread the “b” word, but budgeting is a key plank in your wealth building strategy. Building a budget and sticking to it helps increase your chances of carrying out your plan and achieving your financial goals.
Budgets also help you understand where your money goes each month and prevent behaviors that can endanger your goals, like overspending.
With inflation now at 6.1% in Australia and tipped to reach 7% by the end of the year, it has never been more important to manage your money well.
3. Build Your Emergency Fund
Speaking of inflation, when the central heating fails or the refrigerator quits working, where does the money come from if you don’t have emergency savings?
While you …….