Get rich faster with this investment trick
Autopilot is a handy tool on long-haul flights, and great for lifting investments sky-high. Whether for savings, superannuation or the sharemarket, regular set-and-forget deposits are one of the most effective ways to build wealth. Setting aside $50 a week adds up to more than $10,000 in four years.
Deposits can be sorted quickly online or by calling your bank, super fund or adviser, but understand the tips and traps. The investments must be managed and reviewed annually or when your situation changes.
JBS Financial Strategists CEO Jenny Brown says autopilot works “to a point”. “It’s great to set and forget, but then comes things like COVID, markets moving and job security,” she says. “Should you continue making those contributions or reassess?”
Make sure the asset mix continues to suit your situation, Brown says.
“Most people find it easier from a cash flow point of view to make sure the money is carved off and goes into an investment or super,” she says.
Brown says when investing in shares or exchange traded funds, be mindful of stockbroker costs. It’s often a better idea to build up at least $1000 before buying an individual stock, as this lowers brokerage costs.
Perks Private Wealth director Simon Wotherspoon says the “pay yourself first” strategy works by diverting money towards future wealth before you spend it on weekends.
“The superannuation guarantee (compulsory employer payments) is forced savings that people generally don’t realise,” he says.
Wotherspoon says fewer people are aware of rule changes in recent years that allow personal contributions to super at any time and a tax deduction claim. These are called concessional contributions and people have a $25,000 annual cap that includes employer payments.
Remember that money put into super must generally stay there until retirement. “Make sure you have enough elbow room so you don’t lock up all your money,” Wotherspoon says.