Strategies for long-term wealth creation

• Wealth creation typically requires planning and commitment from investors.
• A diversified portfolio of assets is one of the keys to building wealth while minimising risk.
• Low tax rates for superannuation may help you maximise overall investment returns.

For most people, building wealth takes smart planning and a long-term mindset.

It is essential to understand, however, that investing is not a one-size-fits-all endeavour. Every individual has their own financial goals, risk tolerance and time horizons as they go on their wealth creation journey.

Financial advisers can provide guidance to you to navigate this path and help you to:  

Wealth management starts with setting clear objectives and making a long-term financial plan.

Whether it is saving for your transition to retirement, buying a home, investing in shares or funding your child’s education, these specific goals provide a purpose for investment decisions. This entails taking the time to identify your wealth goals and mapping out how you can accomplish them.

Involving a financial adviser is often invaluable at this stage because they can help you ascertain your current financial position and develop a comprehensive strategy that informs investment decisions which complement your long-term objectives. The aim is to build your financial nest egg steadily and with as little risk as possible.

One of the first things a financial adviser will do is assess your risk profile. Understanding and factoring in risk tolerance is the key to constructing an investment portfolio that aligns with a person’s individual preferences.

Conservative investors may opt for safer assets such as bonds or dividend-paying stocks, while more aggressive investors may pursue higher-risk options such as growth stocks in Australian and international markets.

Many people fear the word ‘budget’, but it is a crucial plan in your wealth-building platform. The first step to successful budgeting is carefully tracking your current expenses and understanding where your money really goes. Once you have this information, you can decide whether your spending habits are helping you achieve your wealth creation goals, or if your spending habits are getting in the way meaning that changes are required.

In line with budgeting, it is important to embrace smart financial habits such as saving regularly, paying off debt and investing appropriately.

Spending modestly early in your life or career – and cutting out debt – is a great way to ensure you have a healthy investment portfolio and income stream later in life. Educating yourself about investing and finance also helps you have informed discussions with a financial adviser that can lead to better investment decisions. 

Diversification involves spreading investments across different asset classes to minimise negative exposure to any single asset or market segment. A well-diversified portfolio has been proven to help investors withstand market volatility and deliver more consistent returns over time.

The security of having a few months of expenses in your bank account to cover unexpected events – such as house or car repairs, or a job loss – can give you real peace of mind. You should also consider risk-mitigation strategies such as taking out insurance.

One of the strengths of having an emergency fund is that you are not forced to rely on high-fee credit cards for life’s essentials should something unexpected happen.

Superannuation is one of the most important financial tools for wealth creation. This long-term investment vehicle can provide significant tax benefits and allow you to build a strong retirement income stream. 

When choosing super funds, it is important to take into account factors such as fees, investments (and their performance) and the level of risk associated with different investment options, along with your own personal preferences. 

One easy way to maximise the benefits of superannuation is to make additional contributions into your super account to take advantage of potential tax breaks and the power of compound interest. A specialist superannuation financial adviser can take you through multiple strategies to boost your super balance. 

A set-and-forget approach to finance is likely to result in under-performance. This is because markets rise and fall, and the best-value investment opportunities can change. Regular reviews of your portfolio can alleviate such risks.

Managing your finances and choosing the right investments can be difficult and time-consuming, and this is where financial advisers can make a real difference. They can provide investment recommendations that allow you to reap the greatest possible returns from your individual financial position.

With their help, you have every chance of creating long-term wealth and pursuing a lifestyle that you desire.

Providing wealth creation and retirement planning advice requires specialist skills. For an initial consultation with a Mercer Financial Adviser, please complete the form below and we will be in touch.