It takes a lot of hard work and smart work to save money. But your job doesn’t end there. You need to further think of different ways to smartly invest the money, so it can grow.
The overall rates in Aussie bank accounts are pretty low (Though there are some high interest account options available explained later in the article). This means you need to come up with plethora of different ways to save your hard-earned money.
You worked hard to save your first $10,000 now let this money work hard for you. First thing is to set goals. How much you wish to save in next 3 years or next 5 years. It can be different for different people. You may wish to save $50, 000 in next 5 years so you can start your own business or buy a franchise. You may wish to save $20,000 in next 2 years to buy your own house or you may be saving for child’s education.
Making financial goal sets direction for you and then you need to work on action plan to achieve this goal. Also, don’t forget to set a time frame as mentioned in examples above. Both amount and time frame are important parts of setting up your investment goals.
If you are saving money over a short period of time, then don’t go for higher-risk investments like shares. Growth investments, such as shares, are not appropriate for short investment time frames as their value might drop suddenly, may be at a time when you really need your money. If you’re saving for a long-term goal, such as retirement in 25 years, then you have time to ride out the ups and downs in the investment markets. This means you can take on a higher level of investment risk.
Going for investment in real estate is also a good option if you like to invest money for long term. In most cases, long term returns turn out to be very good in case of real estate investment. It’s a waiting game. You must know the concepts of positive and negative gearing if you are buying investment property.
Many wonder whether they should buy or rent the house. There are pros and cons of both. I personally think if you wish to save money in short term then renting is better option. But if you do not have immediate need of money then invest in your own house or apartment. Currently, as of writing this article in Aug 2018, property prices are low especially in Brisbane due to huge over supply of apartments. If you wish to buy an apartment, buy it within next one year. It is all about demand and supply. Council approved a lot of apartments in last few years which caused supply exceeding the demand. It is a good time to buy but very bad time to sell your apartment. So consider all these factors before buying or selling.
For immediate investment benefits, the best thing you can do is to actually pay off your debts first. Credit card loans, personal loans and similar and have more than 12% interest rate. So it is best to pay off these loans first to avoid paying high interest rates.
Paying off your mortgage is also a good idea as it will reduce your monthly interest and also pay off your loan sooner. See how much interest and time you can save using this mortgage calculator.
It is also highly recommended to create an emergency fund bank account. Put money here and never take out because this is the money that will be used in emergencies like sickness, unemployment, or disability. Usually between $5-10,000 would be good to have in this account.
If you are looking for best investment options then Canstar has prepared best return on investment options for you divided in 4 categories- Equities, Fixed Income, Cash and Property.
You don’t have to be an economist to work out that investing in shares or property is risky business in the current market. With this in mind, high-interest savings accounts are worth considering as a stable and secure investment option for Australians.
In the end, always follow the rule of Warren Buffett – Never lose money. Follow money saving tips , save money as much as you can and then invest in the right places. Don’t forget the power of compound interest. Einstein called compound interest as 8th wonder of the world. You can also use this Compound Interest calculator to find out
- what money you’ll have if you save a regular amount
- how compounding increases your savings interest
- the difference between saving now and saving later
- how to calculate compound interest
Vikas Rana
Latest posts by Vikas Rana (see all)
- How to activate Muladhara chakra (Root Chakra)? - May 19, 2023
- How an SEO expert can help you with your business in 2023? - March 15, 2023
- Is everything in universe energy? - February 7, 2023
