Take the road to wealth

Seven things you need to know to make your investing journey worth your while.

When it comes to investing there are some essentials you need to know so you can choose the right investments and make the most of them. After you’ve set your goals, consider these seven tips for investment success:

1.   Get ready for the journey

The best way to build wealth is to manage your income effectively. Create a budget using our budget planner or MoneySmart’s TrackMySPEND app. Once you’ve worked out how much you can save to put towards an investment, you’ll have taken the first key step towards building wealth.

2.   First stop: risk

It’s true that every investment involves some risk. But some investments can be more unpredictable than others. Your own risk tolerance is often affected by two factors: the amount of time you have and your attitude to risk.

With time to ride through market cycles you could take on more risk and reduce its impact over time. But if risk is something you’re more comfortable avoiding, you’re likely to choose more conservative investments in exchange for security.

Use our investor-style calculator to determine your risk tolerance so you’ll know which investments could suit you.

3.   No back-seat driving!

No matter how long you’re planning to invest, if you watch any investment’s daily performance you’re likely to be elated one day and devastated the next.

Step back as much as possible by taking a big-picture view. And work towards understanding market cycles so you can keep your eye on the long term and hold your emotions in check.

4.   Take the long road

History shows that long-term investments tend to pay off whether you invest in property, shares or superannuation. Super is a naturally long-term investment and taking charge of yours can help it compound into a small fortune.

Use our salary sacrifice calculator to see how much you could accumulate. And take a look at AMP’s super funds to find out more.

5.   Fill-up regularly

It’s often challenging to make large lump sum investments, and topping up an investment regularly with smaller contributions is a powerful way to build wealth. You may be surprised at just how much you could end up with—explore your options with our dollar cost averaging calculator.

6.   Explore broader horizons

Diversification—not keeping all your eggs in one basket—can be an effective way to level out risk in an investment portfolio. That’s because different types of investments are less likely to be affected by the same market developments. Say you have investments in property and shares; your shares are unlikely to be affected by a property market downturn and vice versa.

7.   Ask for directions along the way

Financial advice can help you set your investment goals and reach them. Ask a financial adviser about different types of investments and strategies—you may be interested in shares, direct property, alternative assets like a hedge fund or managed funds that allow you to invest in property indirectly.

If you’d like to find a financial adviser call us on 131 267 and we’ll put you in touch with someone who can help.

1. http://www.chantwest.com.au/PDFFiles/Chant%20West%20Media%20Release%2020Jan15.pdf

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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.