Beginners Guide To Investing For The Future
Most successful individuals make correct financial decisions early in life. Therefore, if you want to be successful financially, you will need to get started as early as you can. There are many decisions that you can make and steps you can take to increase your chances of financial success. However, the five steps below are the most fundamental for a bright financial future.
Have a financial plan
Research has shown that individuals who have a solid financial plan at the beginning of their careers greatly increase their chances of success later in life. A good financial plan will have SMART goals that may include where you want to live, retirement plans, holiday financing, savings for business purposes and planning for your family finances. You may want to consult with a professional finance planner when making your plan.
Buy a House
Buying a house should be one of the first financial goals of any serious investment beginner. There are various advantages of taking out a mortgage at an early age. Firstly, you avoid wasting funds in rent, as rent does not contribute towards your home ownership. Buying a home early also means that you enjoy capital gains over the years as the market price of the home grows. Furthermore, those who get to take out a mortgage early also increase their chances of owning multiple houses by the time they retire. You can visit NPBS online for mortgages and home ownership advice.
Have an emergency account
An emergency account is a very important tool towards financial prosperity. The account ensures that you have sufficient funds to cushion you in emergency situations if you have lost your job abruptly or gotten into any other financial trouble for instance. With an emergency fund, you should not make untimely withdrawals from your investments or retirement accounts as such withdrawals can lead to major losses that deplete gains made over the years.
Superannuation – save for retirement
Superannuation is a tax advantage that helps you save for your retirement. This retirement account requires your employer to transfer a percentage of your income (Super Guarantee) to your preferred super fund. You can choose to top up the funds that your employer has deducted from your wages so as to increase your retirement savings. The percentage that your employer deducts is determined by law and may change from year to year. The more funds you save to your super fund, the more money will be available for you after retiring. If you are young and have just begun employment, it is advisable to set aside as much funds as you can to add to your retirement account, as your financial obligations are still few. Furthermore, investing in your retirement early in life also means that your funds have more time to grow and earn you more interest.
Avoid credit cards
Most people wreck their finances early in life by excessive and frivolous spending through credit cards. Credit cards enable you to spend much more than you can afford and as long as you can pay the minimum repayment, you can continue using the card. This availability of credit funds can lure you to spend more than you need or than you can afford. To avoid this pitfall, it is advisable to carefully manage your credit card debt and pay off the whole outstanding debt every month. If you do not have the discipline for this, it may be wise to consider using a debit card as opposed to a credit card, as this way you only get to spend what you have.