Wouldn’t it be wonderful to wake up one morning and find your bank account had increased into the 6 figures. Unless we’re lucky enough to win lotto, it’s highly unlikely it’s going to happen. However you can increase your wealth gradually by putting your efforts into the most profitable areas.
Following are 10 tips which consistently increase our wealth creation.
Tip 1 – If you are in a low income bracket, investing $1,000 in your superannuation fund each year can net you a whopping 150% return from the Government’s Co-contribution scheme and in fact last year gave up to a 300% return.
Tip 2 – The best home renovation is to upgrade an old bathroom. With an estimated 102% return. Kitchens and windows come in second adding about 90%. But of course windows have the extra benefit of saving on your energy bills each year. In upgrading your property you also have the benefit of making it more saleable – an important consideration. As a rule, upmarket improvements pay off at lower rates than mid-range or inexpensive ones. And making a house bigger and more luxurious that those of your neighbours will also cost a lot more than it will return when the house is sold.
Tip 3 – It’s worth refinancing your mortgage when you can cut your interest rate by at least 1% and you expect to be staying in your house for a while. Otherwise the benefits of a lower monthly bill many not be worth the additional expenses of transaction costs and fees involved in any refinancing.
Tip 4 – For a home deposit, it’s best to come up with at least 20%.
Tip 5 – Your total housing payments should not exceed 28% of your gross income. Total debt payments should come in under 36%. These guidelines include payment on all loans, such as a car loan and credit card debt as well as any major payments, such as school fees.
Tip 6 – If it sounds too good to be true or you don’t understand how an investment works, don’t buy it.
Tip 7 – A lot of people who have large investment portfolios today, started out small. So aim to save at least 10% of your earnings for investment.
Tip 8 – Expect the unexpected and have an emergency account. Keep three months’ worth of living expenses in a high-yield savings account. If you have children you may need six months’.
Tip 9 – The earlier you start saving, the less you’ll need to set aside every year to meet your goals. That’s because you allow your money more time to grow – the gains on your invested savings will build on the prior year’s gains.
Tip 10 – Diversify your investments and then diversify within the areas. For instance, in property have residential and include commercial or if you only want residential, include a mix of homes and strata properties. This gives you the advantage of limiting your overall risks while giving you the best opportunity to capitalise.
Try to estimate future maintenance costs and work them into your budget. Some homes, especially older ones, may require more regular upkeep than homes built with more modern materials. Nothing outrageous. Just plain sensible suggestions.