As the years fly past (and believe me they do) I often ask myself if I am any wiser today than I was in my ‘20s and ‘30s. I have come to the conclusion that wisdom does not mean intelligence. To me, wisdom is an awareness and understanding of the way the world and people function. It means having a greater appreciation of the consequences of one’s actions or inactions. As part of my acute awareness of life and its circumstances, I regularly contemplate and accept the mistakes of the past, followed shortly thereafter by a reflection on the positive actions that led to my current situation.
This leads me to my core message, which is largely directed at those in their ‘30s and ‘40s First, the passing of time can be likened to the action of a toilet roll.
The closer it gets to the end, the faster it spins.
One day, you may awaken with the dreadful realisation that you are well past the halfway point of your life. If you are among the few fortunate amongst us who will still enjoy good health into your later years, you may discover that your spirit is willing yet your pocket is unable. We all dream of the time that we will have the luxury to choose whether we continue working or not. If we choose to exit the work force, what will retirement look and feel like for you?
Will you have the ability to live your dream lifestyle, or will you be burdened by restricted finances?
The choice you make, must be made sooner rather than later. Deciding to act at 60 years of age is often far too late. Planning for a lifestyle of choice requires willpower, commitment and the right advice. If you are already on that path, then I take my hat off to you.
If you are one of the many who have not yet created a strategy and still awaiting a miracle to happen….START PLANNING NOW. It’s never too soon to implement a plan.
Here are the steps you should take:
1. Make a decision to act now
2. Speak to your accountant and or financial planner. If you have neither, then do something to find one or both. Ask friends, family or colleagues for a reference.
3. Look at the account balances of your personal and superannuation savings.
4. If you own or are buying your own home, check its value by asking a qualified valuer (this may cost you a few hundred dollars) or look at the various online sites to determine what comparable properties have recently sold in your immediate location.
5. Based on your mortgage balance and your property value, estimate you equity. If you are fortunate enough to have bought investment property, do the same calculations.
6. Speak to a competent finance broker in the first instance(rather than a bank, which you can do at a later date). Once again ask for references.
7. Determine your borrowing capacity based on advice from your accountant and finance broker
8. Seriously consider establishing, if appropriate to your circumstance, a Self-Managed Super Fund at a cost of less than $3,000. It’s a fairly straightforward exercise which should take just a few weeks to complete. The tax incentives for buying property in this structure, are substantial and could save you thousands in the long run. Especially once you reach 60 years of age
9. Speak to a real estate adviser to learn about the many options currently available. Remember, property is the only investment vehicle allowing you to borrow and leverage in your super fund and property can deliver some outstanding capital growth in the long term, many times more than you could save simply from super contributions.
The property cycle has its periodic peaks and troughs and now may be a good time to buy as some properties come with sizeable buying incentives.
FINALLY, taking all the above into consideration, get up and do something positive. Don’t wait to get older and wiser. Get wiser now while you are young and have time enough to fulfil your retirement ambitions.