What’s your starting point?
Drafting a plan to achieve your goals calls for an understanding of where you’re at right now.
Begin by looking at money coming in compared to money going out. This is the basis of a personal budget.
Then draw up a list of your assets (items of value you own), and compare this to your liabilities (money you owe). It’s an exercise that shows what sort of financial shape you’re in, and in our experience people are often in a far stronger positon to achieve their financial goals than they realise.
Clarify your goals
Next, identify your goals. These give you something to work towards. Be prepared to divide your aspirations across short, medium and long term targets to gain a clearer idea of what you’re aiming for.
Short term priorities to be achieved in the next 12-18 months could include paying down credit card debt or saving for an overseas holiday.
Medium term goals should be pitched at the next 3-5 years. These may include building a first home deposit, upgrading to your next home, saving for your child’s education or easing your way out of the workforce and into retirement.
Long term objectives are those that span 5-years-plus. Depending on your life stage these goals can encompass paying down all (or a good chunk of) your home loan, building a pool of investments or being able to live comfortably once you hang up your work boots.
Make those goals happen
At this point you’ve set some goals. That’s great. You have ambitions to work towards. From here it’s all about the steps you take to start ticking those goals off your bucket list.
First, decide how much you have to invest by looking at how much you earn and how much you can save each month.
Next, consider risk. We all want to pocket strong gains but higher returns bring higher risk, and only you can decide whether you’re happy to take the slow-but-steady approach and focus on low risk/low return investments. Or are you comfortable accepting the potential for negative returns in the short term even if it means earning higher returns in the long run?
This is an area where we can help you make the choice that's right for you.
Deciding where to invest
The final stage is developing a plan that outlines how you should invest to achieve your goals. Australia has a well-regulated investment market, and you can choose from a variety of investments, with the ability to mix and match to help you reach your financial goals sooner.
The main choices available to investors include:
- Term deposits and high-yield savings accounts
- Fixed interest investments, or bonds
- Managed funds, both listed and unlisted, which let you invest indirectly across all these asset classes, or combine a bit of everything in a balance fund.
Take the first step
Sometimes the first step in achieving your goals is the hardest. Many people are unclear about their top priorities. For others, the risk/return trade-off can be complex to navigate. And for some investors, making the choice between different investments demands professional expertise – especially when considering the impact of tax.
The main point is that having a financial plan in place is a proven way to achieve your goals, and a lot more effective than simply hoping things will all work out.
Contact your Mortgage Choice Financial Adviser today to start navigating your future with confidence, and turn your goals into reality backed by a clear plan of action tailored to your needs and aspirations.