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Building wealth in your 40s can be one of the most lucrative times. Most people are reaching their peak earning capacity, meaning that you should (hopefully) have more disposable income plus many Australians have already started to build a respectable amount in their superannuation fund. If you make good financial decisions now, prepare for retirement and live within your means during this decade, you will likely experience immense financial gain in the long run. If you are approaching 40 or are in your 40s, read on to learn why it’s never too late and how you can start building wealth in your 40s.
How You Can Start Building Wealth in Your 40s
Step #1: Generate Passive Income
The first step to financial freedom is to generate passive income for your 40s. If you are still working a full-time job, you do not have to quit your day job to have a source of passive income. Here are some of the simpler ways to earn a passive income:
Investors can earn a passive income through Australian shares, and with the right investment mix, t could be a smart decision considering Australia has been the second-best performing share market in the world for over 120 years. In general, shares outperform other forms of investments over the long term. This is because the chance of a negative return should reduce the longer you stay invested. You can also benefit from dividends when you invest in companies that pay dividends.
An investment property is also another way of earning passive income as you can generate earnings from rental income and potential capital growth.
Step #2: Seek the Help of a Professional
It is easier to manage your money if you have a professional financial adviser to guide you. By seeking financial advice, you will receive a thoroughly researched and tailored financial advice strategy that will give you the confidence to make informed decisions concerning your finances. Financial advisers will assist you in setting proper financial goals and choosing investment options that are suitable for you.
Step #3: Pay Down Your Debt
You should build up your credit score by paying down your debt and paying bills on time and in full each month. The better your credit score, the more favourable your loan terms and interest rates will be on mortgages, car loans, and other financial products. Check your credit report and credit score regularly to know your progress.
In addition, you should use credit and rewards programs wisely. However, you should avoid applying for new cards every time you get a new credit card offer. Adding multiple new accounts too quickly can hurt your credit score.
Step #4: Invest in Your Retirement
One of the main goals in your 40s should be to invest wisely for your retirement, how. Get your superannuation in order by consolidating unnecessary accounts that are being eaten away by fees and invest your existing balance per your risk appetite and investment goals. The earlier you get started, the greater potential you’ll have for enjoying a comfortable retirement.
If you have excess disposable income, you may also wish to discuss a strategy to make additional contributions to your superannuation with your financial adviser, for example, you could organise a salary sacrifice arrangement with your employer or make after-tax personal contributions.
Keep in mind that the earlier you start saving for retirement, the longer your money has to grow. Consider using your 40s to build your retirement portfolio.
Make the Most Out of Your 40s
It is important to take advantage of your 40s since it can be a time of great wealth creation. The retirement savings you start in your 40s will likely grow substantially by the time you are ready to retire in 20 to 30 years.
Coastal Advice Port Macquarie has the experience and expertise to support you to build your wealth and create the retirement you have dreamt of. if you would like to get started, book online or call us today to secure your complimentary first meeting.
DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.