Ask a financial planner
Superannuation | 5/04/2017 |
5 min read
When it comes to financial success everyone is quick to offer up their success stories. They’ll tell you about the money they made on the stock market, a real estate deal that paid handsomely, or that expensive antique they picked out of a market stall.
Funnily enough, they’re much less likely to discuss the mistakes, failed predictions, and poor choices that set them back. To help balance things out a little, we’ve compiled the five most common financial mistakes people make in the middle age.
1. Upgrades you can’t afford
As people approach middle age they tend to see an increase in salary. Flush with cash, it’s tempting to start splurging out on cars, overseas holidays, or expensive home renovations. While there’s nothing wrong with any of these, people need to consider their broader financial position, and how their spending today is going to impact their future lifestyle. These tend to be your peak earning years, so the more you can invest the better of you’ll be in the long term.
2. Not having a plan
Plenty of people have a vague idea about how much money they have, how much they’ll need, and what retirement might look like. Having a plan can help you crystallise that vision and start taking active steps to achieve it. If you know your savings are coming up short, or that your mortgage payments can be speed up it gives you something tangible to work towards, which makes saving a whole lot easier.
3. Having all your money tied up in your home
While paying down your mortgage is a priority for many Australians, directing all your cash towards your loan isn’t always the best strategy. With interest rates at record lows, diverting some additional money towards your superannuation can help you save tax, and allows you to benefit from strong returns.* Alternatively, you can look at share options, or other investment opportunities. Whatever you choice, diversifying your assets gives you more options, and means you’re better prepared for market fluctuations.
4. Not upskilling
Nokia used to own 40% of the mobile market. Kodak was once a by-word for photos. But times change, and a failure to keep up with them can turn yesterday’s must-have product into today’s footnote. The uncomfortable truth is that the same rules apply to the labour market, and not keeping up to date with industry changes can impact both your earning power, and your job prospects. Taking short courses, learning new skills, and undertaking training can give you a strong competitive advantage.
5. Being too conservative with your super
Everyone has different level of comfort when it comes to investing and risk, but being too conservative can cost you money. One of the most common mistakes people make is staying with their default super option. While there’s nothing wrong with a balanced MySuper option, if you’re working and have another 20 off years of contributions ahead of you, adopting a more assertive investment position towards your super can make a huge difference. Check the Equip MyFuture calculator to see how small changes today can have a big impact on your super balance.
To find out how an Equip financial planner can help you plan a better retirement please visit click here. You can also join Equip at one of our upcoming Retirement Ready Expos to hear more from our planners.
This information is provided for general information only. It does not take into account your personal objectives, financial situation or needs and should therefore not be taken as personal advice. You should consider whether it is appropriate for you before acting on it and, if necessary, you should seek professional financial advice. Before making a decision to invest in the Equipsuper Superannuation Fund, you should read the relevant Equip Product Disclosure Statement (PDS). Past performance is not an indication of future performance. Issued by Equipsuper Pty Ltd ABN 64 006 964 049 AFSL 246383.