Some Common Myths About Investing
I don’t have enough money.
Once you start managing your finances, you’ll find that you will have more control and more possibilities for investment. You can always save a little, even over a period of time. Here are some hints for effective saving:
- Aim to put away around 10% of your income every payday and forget it’s there.
- If you're employed, maximize your superannuation or employment benefit.
- Set up a bank account or investment program that automatically transfers money from your account, it is easier to control and monitor.
I’m too young.
No! No! No! The best time to begin investing is when you are young, even if it is a small amount, it is important to get to know the market and how it works. The earlier you begin, the longer and therefore more effectively your investments will work for you. For example, if you wanted to retire at age 55, as many do, and you begin saving at age 30, you have to save 42.9% of your income, if you begin at 40, you must save 48.2%, if you begin at 50, you have to save 106.6%, which is impossible if you haven’t already begun! The earlier you begin, the less impact it will have of your lifestyle. Growth is your primary objective, and a certain amount of risk is tolerable. This is the learning stage, time to test the waters!
She’ll be right
The typical Aussie attitude. The simple fact is, Australians are living longer and retiring earlier, and many are forced to retire early due to illness. In 1965, the average retirement age was 65 and the life expectancy was 73, in 1995 the average retirement age was 62 and the life expectancy was 84. That is nearly three times the retirement time of 1965! Nowadays, when you retire, you don’t simply need security, you need growth, your investment return is your income. Surviving on your superannuation alone would be like living off less than a third of your current income.
What about the risk?
Yes, there is some risk involved in investing, but the fact is that the general trend of the sharemarket is positive. It may go up and down like a yo-yo in the short term, but in the long term, it is more than likely that your investment will gradually accumulate. The average interest on shares is considerable higher than in banks and term deposits. Even if your savings are earning 5 percent and the inflation rate is 3 percent your buying power is only growing by 2 percent a year. Over time, investors have earned more with stocks than with other kinds of investments, an average of 12.6 percent a year. A difference of 10.6 per cent per year.
My Husband handles that side of things.
Here's a statistic that may surprise you: Out of all females over the age of 21, approximately 85 percent will die as single women. Out of every 100 women, 6 never marry, of the remaining 94, 33 have marriages that end in divorce and 46 outlive their husbands. As you can see, these grim figures suggest that if you are a woman, at some stage in your life you will be forced to manage your own finances.
AW Financial Solutions recognises your need for financial assistance, and we want you to know how important it is that you recognise this as well. These few pages are only a starting point, a springboard into your financial security. AW Financial Solutions is happy to help you from here, our trained team of advisors can provide you with the knowledge and assistance to make the most of this information. If you have any questions, please feel free to give us a call.
