Your money has a Job: Make it work harder

Most of us work hard for our money. We earn it, save it, spend it and hopefully put some aside for the future. But there comes a point when saving alone may not be enough.

Your money can have a job too.

Investing is about putting some of your money to work with the aim of building wealth over time. Depending on your circumstances and goals, that could involve shares, managed funds, property, superannuation, exchange traded funds or other investments.

The important part is not simply investing. It is understanding why you are investing, what you are trying to achieve and how much risk you are prepared to accept along the way.

Top 5 tips for making your money work harder

1. Give your money a purposeBefore choosing an investment, decide what the money is for.

   Are you building wealth for retirement? Saving for a future property? Creating an education fund? Hoping to generate income later in life?

   A clear goal can help determine your investment timeframe, acceptable level of risk and the types of investments that may be appropriate to consider.

1. Understand the difference between saving and investingSavings generally provide stability and easy access to money, while investments usually involve taking greater risk in pursuit of higher long-term returns.

   Both can have an important role.

   Keeping every available dollar in cash may mean missing opportunities for long-term growth, while investing money you might need tomorrow could expose you to unnecessary risk.

   Finding the right balance matters.

1. Think long termInvestment markets move up and down. Headlines can make every rise feel exciting and every fall seem alarming.

   Successful investing is rarely about predicting what markets will do next week.

   For many investors, it is about maintaining perspective, allowing time for investments to grow and understanding the potential benefits of compounding over many years.

1. DiversifyPutting everything into one company, sector, asset class or investment can create unnecessary concentration risk.

   Diversification means spreading your money across different investments so that your financial future is not dependent on one particular outcome.

   It cannot eliminate risk, but it can help create a more balanced investment strategy.

1. Review rather than forgetAn investment strategy should not necessarily be something you establish once and ignore forever.

   Your income, family situation, goals, retirement plans and appetite for risk can change.

   Regular reviews can help determine whether your investments remain aligned with where you are heading.

5 reasons to seek professional advice

1. To define your goalsA Financial Adviser can help turn broad ambitions such as “I want to retire comfortably” into clearer financial objectives and strategies.

1. To understand your tolerance for riskInvestment returns and risk generally go hand in hand. Professional advice can help you understand how much volatility you are financially and emotionally prepared to accept.

1. To build an appropriate strategyRather than selecting investments individually without a broader plan, an adviser can help consider how investments may work together as part of your overall financial position.

1. To remove some of the emotionFear and excitement can influence investment decisions. Markets falling may encourage people to sell at the wrong time, while rapidly rising markets can encourage excessive risk-taking. Having professional guidance can bring greater discipline to decision-making.

1. To connect investing with the bigger pictureInvestment decisions do not exist in isolation.

   Superannuation, tax, insurance, debt, estate planning, retirement income and cashflow can all influence your overall financial strategy. Depending on the issue, your Financial Adviser may also work alongside your accountant or legal professional.

Put your money to work with purpose

Making money work harder does not mean chasing the highest return or taking unnecessary risks.

It means being purposeful.

Understand what you want your money to achieve, give it enough time to do its job and regularly check that your strategy still reflects your circumstances.

You have worked hard to earn your money. The next step may be making sure your money is working just as hard for you.

Before making investment decisions, consider seeking professional financial advice appropriate to your individual circumstances.

If this article has inspired you to think about your unique situation and, more importantly, what you and your family are going through right now, please get in touch with your advice professional.

This information does not consider any person’s objectives, financial situation, or needs. Before making a decision, you should consider whether it is appropriate in light of your particular objectives, financial situation, or needs.

(Feedsy Exclusive)