First steps to building your wealth

building wealth concept. Figures constructing coin towers.

Looking for the most effective way to build your wealth? Not sure where to start?

The first thing you need to do is determine your needs and goals, both short and long term. Once you have figured out where you want to be, you need an appropriate strategy to help you achieve those goals. There is no one way to do this as everyone’s situation is different and it will change as your lifestyle and personal changes. That’s why it’s important to review your strategies regularly to make sure they are still suitable for your needs.

Understanding risk

One thing you need to consider is your risk profile. Risk is related to return – generally, the higher the risk, the higher the return and conversely, the lower the risk, the lower the return. While some people like higher risk investments because they have the opportunity to obtain higher returns, others prefer less risky investments such as cash.

It’s also important to remember other fundamentals of investing - markets are cyclical and shares are a long-term investment. So even if a downturn does occur, eventually they will regain their value, but in the meantime, opportunities may arise.

Superannuation

What about your super? Is it working as hard as you are? Your risk profile can also be applied to your super investments. It’s a long-term investment, but it’s important to make sure it’s invested the right way.

Changes to the amount of super you can contribute each year means you may need to reassess your super strategy. Contributing more to super will not only boost your account balance, it could even reduce the amount of tax you pay!

Obtain advice

Your financial planner can give you professional financial advice to help you determine your needs and goals and establish the most appropriate financial strategies for your personal situation and your risk profile.

They can also help you with retirement planning, tax-effective super strategies and estate planning – in fact the whole range of financial issues that you may need advice on.