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How? im almost 25 and hardly over $10K in saving and struggling to pay bills and rents. My newbie suggestion would be, to ask the bank for a home deposit, providing you have good financial record, $40k toward a $200k house. Or another long term strategy would be in shares. $50k in a 3 years investment share is fruitful, imagine a 40% return per year from $50k,
. DYOR
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lunch
prawn_86
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Im a couple years older than 22 and have a bit more than that in savings.
Plans are:
Get married (25%)
6 - 12 months travel (30%)
Maybe consider buying a house when we get back if the numbers stack up, otherwise leave the balance in current investments [Cash (50%), Hybrids(5%), Silver(5%), Value stocks(22%), and a couple spec stocks (18%)]
Plans are:
Get married
(25%)6 - 12 months travel (30%)
Maybe consider buying a house when we get back if the numbers stack up, otherwise leave the balance in current investments [Cash (50%), Hybrids(5%), Silver(5%), Value stocks(22%), and a couple spec stocks (18%)]
Put in on my home loan.
However if I had a clean slate and 50k I'd buy a house, along the lines of what YoungOne said.
If I were to not put in on the house, I'd put 40k into blue chips Value.Able style, while the remaining 10k into early miners with assets on the ground.
However if I had a clean slate and 50k I'd buy a house, along the lines of what YoungOne said.
If I were to not put in on the house, I'd put 40k into blue chips Value.Able style, while the remaining 10k into early miners with assets on the ground.
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put it in a ubank saver account while you have a good think about it
Never said they don't Noika. A bit silly to assume I am that green.
What I was suggesting was that I would put the money into mature businesses which be able to retain profits largely, so the negative spectrum would be stagnation not receivership. retail staples, monopolies with high cost entry barriers etc, protected industry.
I have time on my side, so risk doesn't factor in as highly into my calculations. Though I do still have a relatively high exposure to speculative small caps.
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Hi Matt
Do what 97% of the population never does and plan for your short, medium and long term future. I think you have done really well to accumulate $50K at your age.
Assuming you have no high interest debt like a car and credit cards outstanding as this is what you need to pay off first. No point having those commitments and getting lower returns elsewhere; and people do exactly that when they don't know any better.
Medium term you will probably want to buy a house. The First Home Saver Accounts that the Govt. is offering pays you 17% ($850) on a max. of $5000 p.a. You should get at least 6% from the account, giving you a very respectable ~23% gross, with a max. of 15% tax. I would allocate say $15K to this financial year, keep $5K back and allocate it in the next financial year in July to get the next 17%. Do your research on this to be comfortable it is ongoing and undersxtand that is you don't use it for a house it can only be allocated to your Super fund. I would wait and see what happens to the housing market, I think the odds are on your side for cheaper than more expensive; or sideways at best in the medium term.
http://www.ato.gov.au/individuals/pathway.asp?pc=001/002/066
Long term you will want to retire and live comfortably. The earlier you can start plannning for this and compounding your capital the more successful you will be and the more you will have. Ignore all the naysayers (and that will include many of you friends) and get yourself into Super if you have not already, but take an active interest in its performance always (90% don't). Minimise your fees, but 'happily' pay them if your Fund is performing OK and learn as much as you can from them. Sack them and move your money if they don't. At your age I would allocate say $20K to this purpose to get you roughly up to speed capital-wise to attain $1m easily. Super is the most tax effective vehicle you can get and you should leverage it to the nth degree across your life.
Work out how much you want to retire on - $2m/$3m? - and then salary sacrifice a small amount all your life, but without fail, actively manage your money through a SMSF once you think it is cost effective to do so, and I will guarantee you will easily and simply meet your end goal. Read Ashley Ormond's, 'How to Give Your Kids $1 Million Each if you have not already, to see how little you need to contribute early compared to later to achieve your goals.
Short term (with long term aims) I would allocate $10K to increasing your financial intelligence and to start learning about the share market, bonds, property and other assets, by actually investing and eventually trading even. Sure you will lose money learning, but that is one of many ways how you pay for your financial education. Don't be scared to pay someone who is smarter than you for good advice EVER; it always pays dividends; do your due dilligence, but NEVER be scared to pay for good property and share courses either, they won't always work, but when they do they can pay back high dividends. Find mentors that are good at making money and hang with them where you can. If you have skills that they don't, you will be surprised how much time you can get from them if they find it a reciprocal relationship.
Having $50K already, you sound more financially astute than most people two or three times your age. If you have not already, read Robert Kiyosaki's Rich Dad. Poor Dad, if for no other reason than to get your head firmly around how important paying yourself first really is to successful wealth creation and budgeting as we all do throughout our lives, regardless of how little or much we earn.
All the also-rans will constantly tell you that you will be dead by the time you can access your money at 60, the Govt. will change the rules, and a thousand other excuses they are using to convince themselves that Gerry Harvey, etc, will surely give them their money back later in life.
Develop a wealth plan to bridge the gap between the time you are say 45 (or whatever) when you plan to be financially independent so you can meet your Super at some point, but not have to work if that is what you choose to do.
Finally, I have had this discussion elsewhere; you can't have your cake and eat it generally in life. Doing the above means you have to make some calculated lifestyle sacrifices; most believe that the world owes them a good lifestyle and that is what is important and borrow and pay Gerry accordingly. You can still have fun; but if you do something like the above you are betting that while all you friends are still working past 65, you can be enjoying a more relaxed lifestyle and not have to worry about being an employee and that fortnightly pay cheque at the age you have planned.
90% of the population is either dead or dead broke at 65. Keep building on whatever financial strategy you choose. Always keep it in context; these 90% are the same people that will be giving you 'helpful' financial advice all your life. Learn to nod and smile nicely.
Reasons:
Excellent post, however I wonder. If you have a 22 yr old with demonstrated savings skills and a willingness to invest, is it still a smart option to suggest extra super contributions. With accessible date being 45 years away, retirement should be easily feasible before 50. Having that funds in super means having to wait a further period for an obscure gain. This is just my opinion, as I am slightly younger the the OP and find that super doesn't cater for my needs.
Excellent post, however I wonder. If you have a 22 yr old with demonstrated savings skills and a willingness to invest, is it still a smart option to suggest extra super contributions. With accessible date being 45 years away, retirement should be easily feasible before 50. Having that funds in super means having to wait a further period for an obscure gain. This is just my opinion, as I am slightly younger the the OP and find that super doesn't cater for my needs.
It is the end $$ goal you are trying to achieve. If you can do it another way without fail that is fine. The low tax threshold inside Super accellerates your gains compared to any other PAYE investing option. Regardless of age, you need to understand the financial benefits that Super affords to the velocity of your capital appreciation.
If you have a target of $2m by the time you are 60 for example and attain half inside Super at a lower input effort due to its tax friendly nature and half outside Super at a higher taxed rate, why not do it?
You still get to the same result, but theoretically with less effort due to the nature of the Super tax environment for capital gains and tax generally. The rules at the moment are that once you are 60 it is all totally tax free. If you were 60, had $2m outside Super, you would likely be in the ~40% tax bracket. I don't know about you, but I know what environment I would rather have my money in.
You can argue the rules will change and they could, but they could change back again by the time you are 60 or whatever. I have seen it all before over 30 years of contributing to Super, and I still know where I would rather have the bulk of my assets allocated.
Oh I agree, what I was suggesting however is that with a young starter, a goal at 60 might now be appropriate, considering it is some 40 years from that point.
For instance, starting at 20 might want to reach a self funded retirement at 40, at which point super is of no use. I know I'd rather have 2 million in funds at my disposable at ANY age, than 2.5 million in super, that's for sure.
The thought of waiting a FURTHER 20 years for a tax benefit, bugger that. There are structures in place which can be of greater advantage to those who want to make use of it.
For instance, starting at 20 might want to reach a self funded retirement at 40, at which point super is of no use. I know I'd rather have 2 million in funds at my disposable at ANY age, than 2.5 million in super, that's for sure.
The thought of waiting a FURTHER 20 years for a tax benefit, bugger that. There are structures in place which can be of greater advantage to those who want to make use of it.
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I strongly disagree with adding any voluntary contributions to super while in your 20s. At this stage, you won't be able to access any of it for at least 30-35 years, probably longer! Over that period of time the government can increase earnings tax, or push out the age at which you can access your super.
If you're successful in you're working life and end up on a high salary, you're employer will be making large contributions each year anyway.
If you're successful in you're working life and end up on a high salary, you're employer will be making large contributions each year anyway.
Yep, having the required passive income assets at 40 is very good, but you have to be highly disciplined, entrepreneurial or remunerated to do that successfully, assuming normal family outgoings that most people have that constantly compete for priority during that time of one's life. A few people definitely do it, we just have to be realistic that most don't, but can do it a bit later if they plan.
I am just suggesting a blended mix to increase the odds of success. Have enough to bridge the gap, but have your feet in both camps to take advantage of Super's benefits. Most people find that working until 55 is fine and even enjoyable and that it comes around so fast you wonder what happened. It is also a time when you can be getting tired of working for a boss, or more vulnerable to becoming unemployed, if nothing else for health reasons (you just don't know your genetics outcome until you get there).
Realistically, 50-55 is when most people who have planned for it will have accumulated their capital base to the point they are financially independent. The gap is fairly easy to bridge at this time. If you have money inside and outside Super, you can bridge an 'x' year gap and meet your low taxed Super later at 60, especially if it is only for ~5 years. The plan then is to be able to move those assets outside into Super as fast as possible.
If you can achieve $2m at 40, I agree it is a long time to wait. If you achieved that outcome at that age, using Super from that point onwards to tax effectively further accellerate future wealth by building within that low tax environment would then come into play.
The main trap I have seen with my friends and associates is that they always had the best intentions of achieving their goals outside Super many years ago. When it is locked away from Uncle Gerry, anectodally only, Super has produced more financially independent individuals from that group and in the main been achieved around 55 years of age.
skc
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I had the same thoughts when I was in my 20s but 10 years later I see it a bit differently.
I have actually never spent the first $50K I have saved. Being a decent saver with a decent income, that $50K (imagine if I earmarked that money) is still being put to use on investments etc. By the time I needed money for my wedding and first home, we've saved up additional money.
At this point I don't foresee that I will ever need to actually spend that $50K unless something truely dramatic happens. In hindsight that $50K in super would have yielded better retruns given the tax advantage.
Obviously everyone is different. If you know you have big spending items coming up, then by all means keep it outside of super. But if you think that, by the time you get married (say) you would have saved up enough from your ongoing income anyway, then putting in super is a worthy consideration.
What you need is a 'life long cashflow' forecast. Sounds silly and it will involve some pretty big assumptions (e.g. you won't get married until 28... then you knock up your girlfriend next week
), but you might discover how high or low the chance of that $50K ever being spent actually is.
