Starting your super savings early
When should you start saving for retirement?
Retirement seems a long way off when you’re in your 30s and 40s, but the reality is that planning ahead and boosting your super can make a substantial difference to the quality of your retirement.
Compound earnings – the ability to earn interest on your interest – can significantly boost your eventual retirement nest egg.
Rebecca and Andrew
Take Rebecca and Andrew – two investors with similar ages and backgrounds but very different initial attitudes towards saving and investing.
Rebecca starts investing $2,000 a year for 10 years, or a total of $20,000, then leaves her money invested for the next 10 years without adding any more money. Eight years after Rebecca starts investing, Andrew begins investing $2,000 a year, over the next 12 years, for a total of $24,000.
By starting early, Rebecca will accumulate over $58,000 due to compounding interest. Despite the fact that Andrew will end up investing $4,000 more than Rebecca, he will receive less than half as much as Rebecca in earnings.
*Assumptions: The projections in this example are based on various assumptions, including but not limited to: Return 7% pa. All earnings are reinvested. No tax assumed – capital gains tax will be deducted from investment when withdrawn. $2,000 invested annually at the start of each year. No administration fees or charges have been deducted.
How these strategies can work for you
It’s hard enough to manage work, care for children and keep on top of the mortgage payments. Financial advice and strategies can help you deal with the day-to-day needs of your busy life, while keeping an eye on your longer-term goals.
To find out more, contact us today.
Building your wealth
Juggling your life and successfully managing your finances can be challenging. Most of us would rather spend time with our families than worry about how to best manage our money.
There are so many major life events during your 30s and 40s – getting married, buying your first home, having children and changing careers – all of which have a great impact on your financial situation.
Building your wealth is about putting long-term strategies in place. This could mean taking control of your budgeting and cash flow, managing your mortgage, putting in place investment strategies or all of these things.
It’s about looking at all aspects of your life and developing strategies that fit.
Major life events
- Marriage or divorce
- Having children
- Career changes or redundancy
- High debt levels due to your mortgage or car
- Changing needs of your parents or children
How we can help
- Budgeting and goal setting
- Savings and wealth creation strategies
- Superannuation planning
- Investment planning
Paying off your mortgage sooner
How can you pay off your home loan sooner?
Taking out a mortgage is a big commitment. It is a large debt that requires strict budgeting to pay off as soon as possible.
A simple strategy that can save years on the term of your mortgage is to halve your monthly repayments and pay them in fortnightly instalments.
Jarrod was making monthly repayments of $2,500 off his $350,000 mortgage with an interest rate of 7.57 per cent per annum. At this rate, it would have taken him around 31 years to pay off his mortgage, and he would have made total repayments of over $955,000.
If he simply halved his usual monthly payment, and paid off his loan fortnightly, he would save eight years and over $186,000.
Difference in repayments:
montly vs fortnightly
*Note: This strategy requires a small increase in your repayments of less than $50 per week.