09 Feb Your Plan A
If by chance, you get to know me for more than five minutes, there is a high possibility that you will notice that I am a big sports nut!
Ranging from soccer, cricket, AFL, formula one, you name it, I will probably know a bit about it.
It is surprising that even the sports I don’t enjoy too much like rugby, I am happy to check it out every now and again.
One of the first dates my (now) wife took me on was to a Kiwi pub in Melbourne called the Maori Chief to watch the Bledisloe Cup.
My wife, who is a proud New Zealander, was very excited to watch her beloved All Blacks take down the Australians, surrounded by her fellow countrymen and women. I went because she was super cute and I wanted to impress her!
I don’t understand how rugby works – I really struggle with the concept of throwing the ball backwards to go forwards.
Nonetheless, I do know class when I see it. The All Blacks were first class!
They passed, tackled, outran and outplayed the Australians and won 42-8. Truthfully, the All Blacks could have scored 100 that night, because they were that good!
The point is that, if you want to win any sport, you need a plan (often referred to as tactics). You need a Plan A (offence – when things go right) and a Plan B (defence – when things go wrong).
Interestingly, the same concept applies to your finances.
You need a plan which includes both a Plan A (what you are going to use to build wealth) and a Plan B (the backup options you have in place in case something goes wrong).
In this article, we will talk about your Plan A.
So, let’s say that you have built up your income and purchased a home, now what? What are you going to use to build wealth over the long term?
There are many ways to build wealth. These include shares, property, bonds, and bitcoin (although bitcoin investors are losing a hell of a lot of wealth at the moment, not building it).
I am not discrediting these methods, but in order to get the basics right, there is one wealth creation vehicle we all have, but I don’t think we utilise its full potential.
Perhaps, it may be due to a lack of knowledge or because it is (at first) very complicated, but either way everyday Australians are missing out!
And just like the first two areas (building your income and purchasing a house) that you need to master, this wealth creation vehicle that I am about to share with you is also very simple and to a degree somehow boring.
But I guarantee you that if you do it the right way over the long term, it will generate more wealth than any other source of investments for 99% of Australians (even taking into account capital growth on your home).
In order to Master Your Money Now, you need to master your super.
Superannuation is that thing your employer sets up for you when you start your first job flipping burgers at McDonalds or stacking shelves at Woolies or Coles.
It sticks with you for the rest of your working life, then you can access it to live off in retirement.
So what is superannuation?
Superannuation is defined by the ATO as “a system where money is placed in a fund to provide for a person’s retirement”.
Funds are placed into an account which are invested on your behalf (unless you have a self-managed superannuation fund (SMSF for short) which most everyday people don’t have and most importantly should not have).
Let’s leave the definition and all the technical details for now. An important question to ask yourself right now is:
Why do you need superannuation?
The fact is that the government will no longer be able to fund our retirements (in the past, it all rested on the shoulders of the government), so now they have passed the responsibility of taking care of retirement on to the individual.
This is why the super system has been created to help you take control of what will happen to you financially when you retire.
The way it works is that your employer puts in 9.5% of your salary into superannuation (or if you are self-employed you should be putting in 9.5% of your salary into superannuation) and it will be invested in accordance to the investments you have selected.
Depending on your consistency of putting in that money month in, month out and also based on the performance of your investments, this will determine how much you have in retirement.
You need to also know that the amount of money to contribute into your super and the type of investments you should choose to grow that super varies from person to person.
Look, super is not perfect. It is restrictive, and had experienced some rocky moments in the past.
But it is a fact that superannuation is here to stay. It is a new system that had been tweaked to get the balance between ‘saving for retirement’ and a ‘tax haven for the wealthy’.
The earlier you Master Your Super, the earlier you can retire and the more you have in retirement. Also, you will be able to retire living a lifestyle that is set by you, not set by the government.
If this is a topic that you would like to discuss in more detail, please go to www.MasterYourMoneyNow.com.au/getstarted to book in your complimentary 30 minute strategy session.
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Disclaimer: This information is general information only. You should consider the appropriateness of this information with regards to your objectives, financial situation and needs. Past performance does not guarantee future returns.
Chris Carlin is an Authorised Representative (No. 1235031 for financial services and No. 514748 for credit) and Master Your Money Now Pty Ltd ABN 65 627 229 681 is a Corporate Authorised Representative (No. 1265677 for financial services and No. 514747 for credit) of Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523