Working a regular 8-hour job is no longer a guarantee of financial independence. With the cost of living increasing like a never-stopping train, it has become essential for people to utilize other ways to boost their income other than their regular 9 to 5.
The purpose of investing can cater to everyone’s individual needs; from investing by students to earn some extra pocket money, investing to generate a retirement fund, or generally increasing wealth, the possibilities are endless. However, a large number of people still do not utilize this opportunity. As per a report by Australian research agency Canstar, 79% of Australians save a portion of their post-tax income each month. This figure does seem impressive, however, on the flip side. The report also notes that 30% of Australians had to dip into their savings to meet expenses, and 11% had to take on more debt.
This trend is expected to increase further, as peoples’ incomes are not keeping up with the inflation levels. As per ABC News, Australia recorded an inflation level of 3.5% in 2021, against a wage increase of only 2.1%. This means that the higher increase in living expenses has eroded income growth. Suppose people are unable to increase their incomes. In that case, they stand to compromise their future financial plans, such as planning for retirement, saving up for a down payment on a house, or even putting money away for their kid’s college. Therefore, investment has become necessary to boost income and ensure a sustainable financial standing.
All such money issues can be avoided if people look for alternate ways to supplement their regular incomes. There are several wealth creation services in Brisbane, such as Top10 Financial Planner, that will help you find the best financial advisors for your unique needs. While getting professional help is the way to go, here are four ideas that you can look into to contribute to your wealth.
Invest in the Stock Market
The stock market has been among the most traditional platforms for investment in the financial world. Known as the barometer of an economy, the stock market is where the trading and issuance of shares of publicly owned companies takes place. Historically, return on the stock has been much better than returns from saving accounts or fixed return investments like treasury bonds. Holding company stock helps you save, shields your money from the impact of inflation and tax, and generates earnings in a capital gain or dividends.
As with most investments, the stock market is not oblivious to dangers and risks. You will be far better off carrying out proper research before investing in the stock market, as various factors affect a company’s stock value movement. However, if you do not have the time or know-how to do your research, you are better off investing in an Index fund. Instead of focusing on individual stocks, index funds are designed to replicate the composition of the whole market or a sub-segment. This allows you to broaden the risk base of your portfolio against market volatility. Index funds are a time-tested investment source for multiplying your wealth.
Life insurance is a crucial tool to safeguard your family. Under a life insurance policy, your family receives the insured amount (which is non-taxable) in the event of your death. This money can cover important expenditures, such as paying off a mortgage, auto loans, personal or credit card debt, etc. Depending on your coverage plan, your life insurance policy can also cover the following:
- Disability: where you will receive payment to assist in rehabilitation and meet living expenses,
- Income Protection: You will receive part of your income when you cannot work due to illness or injury.
- Trauma: where you will be covered in the event of a major illness.
Your life insurance policies continue even after you retire, and their benefits can be availed by your family even when you are gone. Before you finalize a life insurance policy, be sure to check on what benefits are covered and excluded under the policy, the information on premium payments and how they change over time, and that you and your family make yourself aware of the process to file a claim.
Real Estate Investment
Directing your savings towards real estate can almost be considered a natural move. Real estate may not have the stock market’s momentum or any cryptocurrency. However, real estate investment has provided consistent returns and is a reliable investment option. The real estate market provides stability. Historically, the real estate sector has been a haven of sorts. The sector has proven to be unaffected by economic shocks, such as the IT bubble burst and the 2008 recession.
In Australia, the tax system is favorable towards real estate investors, as it allows you to write off costs related to your investment when calculating your tax. Investment in this sector is also incentivized by the government, as they have several grant programs for which you can be eligible. Additionally, investing in affordable housing is also compensated through the government’s National Rent Affordability Scheme, which provides annual financial returns for up to 10 years.
Several banks and financial institutions provide Term deposit facilities, where you place a specific amount for a specific period and get a fixed return. The main attraction of a term deposit is the product’s low-risk nature, which provides a guaranteed return. Term deposits provide a higher return rate than any saving account. Generally, remember that the more the amount you put in and the higher the investment period, the higher the return you can get. Most banks even offer tailored rates and deposit terms to their valuable customers than the published rack rates, so do have a chat with your banker when opting for this risk-free, guaranteed return option.
The global financial system has evolved substantially, and recent trends show that investing has become necessary for long-term financial security and safety. Most finance professionals recommend that people try to put aside a portion of their monthly income to be invested regularly. There is no shortage of investment opportunities, a few of which have been mentioned in this article. Going for even the bare minimum will benefit you more than doing nothing.