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How millenials can explore the world of investing with SMSFs

How millenials can explore the world of investing with SMSFs

SMSFs (Self-Managed Superannuation Funds) are a great way to dip your toes in the share market, invest in property and learn how to increase your wealth.

You need to transfer 9.5 percent of your income into superannuation every year. But for a lot of people, these funds just sit in an industry or retail fund until they turn 60. (And if the government has their way, that preservation age to access that money could go even higher.)
SMSFs are a great way to learn about how to grow your money slowly.

Many people are simply not aware that your super is a source of capital that you can control and manage yourself. They are a great way to become more disciplined with your money and learn the highs and lows of investing.

We ‘millenials’ often just sit on the bench to wait and see how our wealth will grow. But growing up in such an information-rich environment means we have the greatest opportunity to build wealth using our super.
And if we can get it right in super then we can get it right outside of super.
Supplementing our income with passive investments is going to become more and more important as the costs of living rise. And if we’re going to play in this field we need to learn how to use our money sensibly, and how much risk we should take.

To maximise our wealth, we need to start using super as early as possible. Unfortunately, this sometimes leads to a major blunder: having multiple industry funds. You may think you’re spreading the risk, but the fees and administration costs of each fund can quickly dilute your money pot. Even if you don’t head down the self-managed space, you should still consolidate your super to maximise your reserves for retirement.
Fortunately, Gen Y we have time on our side. And the strategies are simpler to execute.

We need to shift our investment focus from risk-based to objective-based. We need to pursue realistic money-making goals, and understand what risks we should take and what money we need to commit now to make us better off later in life.

We can’t afford to be conservative and here’s why. Let’s say you’re 30, and want to retire at 60 with an income of $60,000 per year—the same as you’re earning now. For that to happen you’ll need about $2.9 million in your superannuation fund. But if you’re only contributing the 9.5 percent minimum, you’re looking at a shortfall of about $1.8 million.

To maximise our wealth, we need to change the way we think about it. Thanks to our current tax system, we can no longer rely on the income you get from your day job. We need to look for other ways to not only simplify our finances but also drive growth.

We need to pursue more realistic money-making goals. And the SMSF space is the perfect place to start. We can balance our investments (both in and out of super), and even explore negative gearing to suit our tax needs.
And with today’s technology, we can easily see how quickly our wealth is growing.

So don’t just sit there and wait for someone else to grow your money. Get active with superannuation, so you can then learn how to invest outside of super to make life more comfortable.

Because no matter what your budget is, having passive investments that deliver capital growth and income streams is the only way you will ever bridge the funding gap.

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Achieving your 2016 business goals: Are you still on track?

Achieving your 2016 business goals: Are you still on track?

Once again the year seems to be flying by. We’re already well into the new year, and there’s no sign of it slowing down.

So how are you going with your annual goals? Are you still on track.

As you can imagine it’s a busy time of year for us accountants. But I still make time to reflect on my business — how it’s performing, and what projects need completing for me to accomplish my goals.

And it’s probably a good time for you to do the same.

What do you really want? Why are you in business, working hard every day and taking risks instead of playing it safe like your friends? 

If you’re anything like me, your answer is probably freedom. The freedom of having enough money to buy nice things and share unforgettable experiences with our loved ones. And the freedom of having enough time to do what we want, when we want.

And we’re not the only ones. It’s probably the one thing all business owners have in common.

And with the year more than half gone, it’s time to take an honest look at your business and decide whether you’re still on track to reaching your longer-term goals.

Here are some questions for you:

  • How much could you sell your business for right now?
  • If a buyer come along today, what do you think you’d get for it?
  • How much could you negotiate on the price?
  • Would it be enough for you to retire on comfortably?. 

Answering these questions forces you to come up with a figure you think will give you the financial freedom you’re looking for.

So what’s your figure? A million dollars? Three million? Five million? Ten million?

Like most business owners, whatever figure you chose is probably a long way from where you are now. But that’s okay. What’s more important is coming up with a way to get there.

The best place to start is with your ‘freedom’ figure. Write it down, and then write down the major business goals that will get you there. Now, break down those big audacious goals into ones you can achieve within certain timeframes — seven years, three years, one year, 90 days and even the next seven days.

By setting up your endgame, and linking your goals for each time period to it, you map out the goals you need to achieve and the deadline for achieving them. And if you’re not achieving your goals within the timeframes, you may need to make some changes or even come up with a more realistic figure for your endgame.   

Obviously the higher the figure and the more outrageous goals you choose, the harder you’ll have to work to achieve them. But again, that’s okay. What’s important is getting into the habit of thinking where you could be in five or ten years time. Even if you manage half of what you set out to achieve,  think of the difference it would make to you and your family.

At FBZ Accounting we can create a one-page plan for your future that shows:

  • how much you think you need
  • an estimate of what you might have
  • how we can help you reach this goal.

It puts you in the driver’s seat, and gives you an idea of how things could look in the future if you make some changes now.

Ready to look forward to a better future? Get in touch with us today so we can show you what it might be like.

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Why you need motivation to be successful (and where to find it)

Why you need motivation to be successful (and where to find it)

Life is pretty routine at the moment. You’re working hard in your business, paying your fair share of tax and looking after your family.
But it doesn’t feel like you’re making any real progress. You’re just treading water, doing only what’s necessary to meet your obligations. Unfortunately, the monotony of business can be polarising. And those obligations won’t keep you motivated for long.

How do I know? Because I’ve been there. I’ve also felt like I was treading water and getting nowhere.

Fortunately, I managed to shift gears and get out of the rut. And you can too—by changing your approach.

We’ve even done the same here at FBZ Accounting by:

  • embracing technology (and trying to keep to pace with it)
  • investing in people power and hiring staff (the time you can get back with good staff is priceless)
  • starting to focus on the things we like to do instead of dwelling on the things we have to do.

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