7 savvy ways to grow your wealth
You don’t need to start with a fortune to grow wealth – but you do need good foundations on which to build. From where you get investment ideas to how you manage your taxes, it is the little things that add up to quickly grow wealth.
Lay the groundwork with these easy-to-implement tips:
1. Start early
The longer your investments have to grow, the more wealth you should accumulate.
That’s thanks to a combination of value growth over time and the compound effect of reinvesting profits and dividends. So start investing now.
Additionally, good habits formed early are more likely to become ingrained.
2. Create a savings and investments plan
I hate the word ‘budget’ – it’s the financial equivalent of a diet. A savings and investments plan both sounds nicer and is more encompassing.
This plan gives you visibility over your incomings and outgoings, your assets, and liabilities. Then you can determine if debts are being paid down as fast as possible and whether any surplus funds are being invested prudently.
3. Have an emergency fund
This might seem counter-intuitive – squirrel money away that you could be used to invest and grow your wealth.
But having available cash should disaster unexpectedly strike – such as redundancy, illness, even another pandemic – means you won’t have to sell assets to make ends meet.
Forced sales may generate below fair value for a quick result or occur at a low point in the investment cycle. Plus, that asset and its growth potential are gone for good.
4. Reduce your tax bill
No one likes paying taxes. Surprisingly, though, many people pay more than they need to.
Avoid under-declaring your deductions: good record-keeping will help you claim your rightful deductions, such as for donations, investment expenses, business costs, and even financial advice fees.
Embrace legitimate tax breaks: for instance, spousal super contributions and certain investment structures (like family trusts) can be used to cut your income tax or get taxed at a lower rate.
Look at the calendar: Which financial year you sell an asset or claim a benefit can affect your tax liability.
5. Invest wisely
A gung-ho approach to investing can be a costly mistake, so invest wisely. If something seems too good to be true, it probably is.
Only invest what you can afford to lose – while the aim is for investments to grow in value, you shouldn’t be left destitute if things go pear-shaped.
Have a clear exit strategy – know when and how you will sell to maximise your returns, keep costs down and minimise your tax on the profits.
6. Get good advice
Your father, sister, friend, or hairdresser may mean well, but unless they are qualified to give advice, you could be making a mistake.
Money matters are complicated and most people simply don’t know what they need to know. Plus, everyone’s circumstances are different – so what worked for dad, Julie, Tom, or Bev might not be beneficial for you.
Just as you want medical advice from a doctor, seek advice about money from those qualified and registered to give it: your financial adviser, tax accountant, estates solicitor, and mortgage or insurance broker. Chances are the cost of that advice is far less than you stand to lose through an avoidable mistake.
7. Invest in you
You are an asset that, when in tip top condition, can deliver a solid return on investment.
Invest in education and training: gaining extra qualifications and skills allows you to boost your earning potential.
Invest in your wellbeing: Good mental health equals wiser decision-making, better productivity, and hence more room to grow your income.
Invest in your health: Good health means lower healthcare costs, fewer lost work hours and cheaper life and disability insurances. Not to mention a longer lifespan allows you to enjoy the fruits of your wealth-building efforts!
Helen Baker is a licensed Australian financial adviser and author of the new book, On Your Own Two Feet: The Essential Guide to Financial Independence for all Women (Ventura Press,
$32.99). Helen is among the 1% of financial planners who hold a master’s degree in the field. Proceeds from book sales are donated to charities supporting disadvantaged women and children. Find out more at www.onyourowntwofeet.com.au
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