It’s always a time of reflection and goal setting as the year comes to a close. Resolutions start popping up and the idea of a fresh start is an exciting one.
Many people start out strong, and about 2 1⁄2 weeks into it, fall off the wagon. Usually they go out guns blazing, too fast and too brutal to actually maintain changes for the long term. We’ve all been guilty of this, even the best list makers and goal achievers fail along the way.
Well, if you have decided that 2015 is the year that you finally start investing, then read on. In order to get yourself investing in the New Year, there is a bit of housekeeping you need to do. Below are the 4 main things you need to consider to ensure that you can invest in 2015.
1. Spend less than you earn
In order to invest, you need something to invest with. If you are one of those people who spend every dollar they have, then you aren’t really helping yourself. You need to review your budget and ensure that you are living below your means. Whatever excess income you have, will be what starts your investment portfolio, so make sure you take it seriously. You can start a portfolio with as little as $2,000, and a monthly contribution of $100 so making the adjustments to your spending could get you there sooner.
In order to get yourself investing in the New Year, there is a bit of housekeeping you need to do
2. Review and reduce your debts
If you have debt, then you need to review this asap. This may mean engaging a mortgage broker to review your home loan to see if they can do better, or upping your credit card payments to get rid of it sooner. Debts drag you down and inhibit your ability to throw excess cash into your investments. Depending on your situation, a credit card balance transfer might be worthwhile if you think that you can pay it down within the interest free period. This strategy could save you a heap on interest as long as you pay it off in time.
Whatever excess income you have will be what starts your investment portfolio
3. Keep your receipts
A hearty tax return is a great way to kick off your investment portfolio, but they aren’t always guaranteed. To put yourself in the best position to get a large tax refund, make sure you keep all of your potential tax deductions. A good accountant or tax agent will be able to tell you what you can and can’t claim, but if you don’t have the receipts, they won’t be able to help you much.
Debts drag you down and inhibit your ability to throw excess cash into your investments
4. Start an emergency fund
There is nothing like an unexpected nasty popping up to derail your perfectly laid investing plans. We can’t budget for everything as we never know what is around the corner, but having a ‘budget buffer’ will soften the blow. An emergency fund of $2,000 is a good starting point to ensure that life’s little gremlins don’t sap funds from your investing goals.
By making the above 4 changes to your finances, 2015 could be the year you start your investment portfolio. You can start small and build over time as the power of compound interest will be on your side. It’s about changing your mindset and realising that it is achievable. Committing to the right habits now will help to get you there quicker.
Cara Brett is the Director and Senior Financial Adviser at Bounce Financial. Having worked in the financial services industry since 2003, she saw an opportunity to work with the young professionals and the movers and shakers in Brisbane, and so Bounce was born.