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Financial Superpowers Join Forces

Compounding interest can be your very own financial superpower but when combined with the benefits of contributing earlier in life to either your investment portfolio or superannuation, together with investing a small amount but on a regular basis, the financial superpowers of these forces can be harnessed to your advantage and potentially earn you thousands of dollars.

The benefits of compounding interest and contributing earlier to superannuation and investments can be demonstrated in the following example:

Take someone who commences investing at age 30, and invests $200 per week for 10 years, contributing $104,000 versus someone who commences at age 40 and invests $200 per week over 25 years, contributing $260,000. Assuming a return of 9%, the person who contributed from 30 years of age has a significantly larger amount of capital available at 65 totalling $1,595,049, despite contributing 40% less than someone who commences contributing at age 40 and has $952,779 available at age 65.  THE EARLIER YOU START ACCESSING THE BENEFITS OF COMPOUNDING INTEREST THE BETTER THE FINANCIAL OUTCOMES WILL BE!

Investing early does not require you to have access to large lump sums, in fact by investing smaller amounts on a regular basis you are able to have access the benefits of a fluctuating share market:

The above investor purchased 274 shares for $2,000 over ten months. The average price of XYZ shares purchased is $7.29 ($2,000 divided by 274 shares). This is less than the average market price of XYZ shares, which is $7.60 (average in column B). BY MAKING SMALL REGULAR CONTRIBUTIONS THIS INVESTOR PURCHASED MORE SHARES OVERALL FOR A LOWER PRICE!

To ensure you are harnessing these financial superpowers to your advantage contact an Income Solutions Advisor at: contactus@incomesolutions.com.au.

The first steps in planning your finances

It is never too early (or late) to start seeking financial advice and begin planning your finances. Following are some fundamental basics to get you started:

Know your budget:  Budgeting sounds like a dirty word, but it is not.  It is simply being aware of what you are spending and not uttering the words “I don’t know where my money goes.”  

Some tools to assist you with budgeting include:

The Budgeting Tools attached to your internet banking services.

A personal budgeting spreadsheet which can be accessed by clicking on the following Resources link to the Income Solutions website: https://www.incomesolutions.com.au/how-can-we-help/resources/

The Money Smart government website provides comprehensive calculation and budget planning tools: https://moneysmart.gov.au/budgeting/budget-planner

Avoid bad debt:  Don’t spend beyond your means as this is what we call running straight to lifestyle, spending via a credit card or personal loan and it only causes stress. Some tips to avoid the strain caused by bad debt is to always pay your credit card off at the end of the month before you are charged any interest and if you have a personal loan or car loan, pay off more than the minimum each month to clear this debt as soon as possible.

Start a savings plan: If you notice you have surplus income, do something with it rather than spend it. Think about your goals – you may want to take a holiday, buy a new car or a house. Start putting money away for this now, and the best way is to have the funds come out of your account on a regular basis. There are many options for high interest savings accounts. Do your research and find the best one for you.

Now you are an independent adult you need to think about personal protection: What would happen if you were sick or injured and unable to work for a period of time? How would you pay the bills? Would you have to look to your parents to pay them? It is your responsibility to ensure your most valuable asset, your income, is protected.  For further details on protecting your income click on the following link:  https://www.incomesolutions.com.au/income-protection-protecting-your-most-valuable-asset/

Lastly, seek financial advice and expertise from a trusted financial planner whose investment philosophy aligns with your future financial goals. Register today for the free Income Solutions Common Sense Investment Session where you will be given financial knowledge and information to make the best financial decisions for you: https://www.incomesolutions.com.au/

Dimensions of an Asset


In this article we will be breaking down the dimensions of an asset. The core two dimensions of an asset are the Income the asset generates together with the asset’s Capital Value and worth.

When viewing the Income dimension of an asset, we need to outline the three main Income producing asset categories:

Property: generating an income through the rental market
Shares: generating an income by paying dividends through the share market
Cash: will generate an income by paying interest

When focusing on the Capital Value dimension of an asset it is worth noting:

Property: the true capital value only known when the property
is sold
Shares: The capital value of a share is known on any given weekday
Cash: The capital value of cash does not rise or fall

At Income Solutions we believe that people focus too much on the Capital Value of an asset or investment and not enough on the assets Income producing capabilities.

If you concentrate on the first dimension of the asset, the Income it produces, you will have a far greater chance of building a Capital Base that will provide you with an Income to support your life…. forever!

For further details on the Dimensions of an Asset watch the following video by Income Solutions Advisor, David Ramsay: https://www.youtube.com/watch?v=AqlhNmYHjXw

Wellbeing is Interconnected

In a recent Income Solutions blog titled ‘The Value of Advice’ (https://www.incomesolutions.com.au/the-value-of-advice/) it was stated that Trustworthy expertise that empowers people with the information to make informed decisions together with raising awareness on their financial behaviours, will give people valuable financial insights and understanding. However, this does not tell the full story as evidence further shows that greater financial wellbeing builds and increases our overall general wellbeing.

This is clearly demonstrated in a study appearing in the ‘ANZ Roy Morgan Financial Wellbeing Index, 2019’, in which the research provides a compelling story.

The figures clearly showed that those who were satisfied with their financial wellbeing were less likely:

to have regrets about their financial behaviors and felt content with the financial decisions they have made.
This was demonstrated by the fact that 1 in 3 people noted they were dissatisfied with their financial situation and out of this group 77% has regrets about their own financial behaviors.

to be losing sleep over financial worries.
In this study, 1 in 5 people who had financial worries were losing sleep.

to be suffering from depression or anxiety.
Statistics showed that 22% of people in financial hardship identified as experiencing persistent depression and/or anxiety.

to be experiencing loneliness.
Good financial wellbeing has the capacity to lead to greater trust in our communities and structures of government and can increase our levels of community connectedness which in turn lowers the likelihood of experiencing loneliness.

The above facts highlighted in this study show how our financial wellbeing and general wellbeing intersect, and for many of us validate the care and time taken to plan, save and set financial goals, as it is not only our financial goals that are being meet but our lifestyle and general health ambitions too.

The Value of Advice

Clarity, control and choice is provided to people when they receive the right ‘Advice’. Comprehensive financial advice that enables people to clearly articulate goals and aspirations and provides ongoing support into the long term will help protect and insure what they care most about. In fact, in a recent paper from Rice Warner on the Future of Financial Advice it was stated:
“Those who obtain advice accumulate 3.9 times more than those that make their own decisions”
Trustworthy expertise that empowers people with the information to make informed decisions together with raising awareness on their financial behaviours, will give people valuable financial insights and understanding.
The right Advice can be fundamental not only to our financial wellbeing but also to our general wellbeing, as illustrated:

This research highlights the benefits of partnerships, the partnership of a client working together with a professional Advisor who will inform, guide and provide options and choices for people to control with greater clarity their financial future.

Major Investment Goals

An investment in Yourself, Your Career or Your Business can provide you with the tools to increase your wealth and build your capital base.
A capital base, when invested within the principals of the Income Solutions investment strategy, will allow you to build an income for life and plan for and live the lifestyle that you choose:

Over the many years Income Solutions has been operating, it has been a privilege to witness how our clients have both personally and financially flourished when they have chosen to implement this investment combination.
It is never too late or too early to get started on building your Capital Base as this can be achieved in unison with fulfilling your own unique dreams and priorities.
The following video provides further details on building your Capital Base from Income Solutions Principal, David Ramsay:
https://www.youtube.com/watch?v=OKEFoz5VDJo

Building a Lifestyle

The first step in planning for the lifestyle that you want to live is to build your capital base (the money and assets you own) to where it will not only fund your lifestyle in the short term but will generate enough ongoing revenue that your income will continue to build and be replaced, thus providing you with an income for many more years to come together with creating a foundation for intergenerational wealth.

In speaking to people about what is important to them many of their main priorities include.

~ Family
~ Travel
~ Home
~ Entertainment
~ Leisure

It is crucial to identify whatever it is that is important to you as this will assist you in answering the core vital questions, How Much? Where from? and When?

Whatever your answers to these questions maybe and whatever priorities you identify when answering these vital questions, remember you only get one shot at life and it is worth planning for!

For further details regarding planning for your Lifestyle click on the following video link to hear from Income Solutions Principal, David Ramsay:
https://www.youtube.com/watch?v=aRTS0u8L_w8

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