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CASE STUDY:
Driving Fiona home from the airport I wondered how I could
subtly bring up the subject of her success. She had achieved
everything she had set out to do. She was returning from
a two-month holiday in Europe for which she had paid cash.
And this holiday was the reward she had given herself for
reaching her goal of putting a $30,000 deposit on her dream
apartment.
Not only that, but I was driving her home, not in my old
rust bucket, but in her brand new car. Paid for in full!
In the end I just blurted out the question that had been
puzzling for some time. How had she managed to achieve so
much while I, on a good wage, had nothing to show for my
hard work?
"Well," Fiona explained, "I had tried saving
before, but what I saved never amounted to much. Just as
I got a little ahead I'd get sidetracked and spend the lot
on clothes, or a weekend away or something else inconsequential.
So I look for a good financial adviser -not only someone
qualified, but also a person I could relate to and trust.
Together, we worked out a plan.
"I told my financial adviser what I wanted - reliable
transportation, a nice apartment close to work and a holiday
in Europe - and she showed me how to get them. There was
no magic formula, just 3 easy steps:
| 1. |
Set yourself achievable
goals and write them down. |
| 2. |
Draw up a
budget, know your expenses and how much you can
save each month. |
| 3. |
Make a plan to invest,
and invest according to your plan. Commit to investing
on a regular basis. |
"The most important piece of advice that she gave
me was to invest rather than save. When you save, you have
easy access to your money and the interest is too low. Your
money isn't working for you.
"My adviser recommended investing in managed funds.
She showed me charts which simply and clearly explained
their many advantages.
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There is less temptation to withdraw
cash, so you tend to leave your money alone. |
|
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The longer you leave it alone, the
more your money grows because your interest compounds. |
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Managed funds give you access to investments
which provide opportunities for real growth, like Australian
and international shares and property. |
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Some people
think that these investments can be very risky, but
no so - investment techniques such as diversification
and dollar cost averaging reduce your exposure to risk,
but still let you earn high returns. |
"The real investment risk is leaving your money in a savings
account where it isn't working for you. Eight years ago
I started with $1000. I not only invested it, but added
$400 a month to my managed fund out of my salary. That,
plus my investment earnings have made all my dreams come
true".
Reproduced with the kind permission of ING
Funds Management Limited
© 2000 - 2006 Forsyte
Consulting Pty Ltd. All rights reserved unless otherwise
stated.
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