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Investing basics for first timers

 

The students of 2020 are graduating to the adult world in one of the most uncertain times in recent history amid recession, pandemic and global political tensions. In times like these, knowing the basics of how to get started down the road to prosperity is more important than ever.

 

       

The students of 2020 are graduating to the adult world in one of the most uncertain times in recent history amid recession, pandemic and global political tensions.

The prospect of working, saving and investing is a daunting prospect – and the hope of home ownership must seem an eternity away.

In times like these, knowing the basics of how to get started down the road to prosperity is more important than ever.

Here are five tips for the class of 2020 to keep in mind as they navigate their financial futures.

Budgeting

Charles Dickens wrote a famous argument in favour of financial prudence when he said the difference between happiness and misery was spending a mere sixpence less – or a sixpence more – than you earn.

Budgeting effectively is the first and most critical financial lesson. Knowing how much is coming in and going out is critical to building good money habits.

Next, the trick is to regularly put something away into savings.

Some call it an emergency fund, others say they are saving for a rainy day. The result is the same – a lost job or an unexpected bill can be financially devastating and having funds to protect from the unknown is critical.

Only once that emergency buffer is stashed away in a bank account should new investors consider moving future savings into higher return investments like the share market.

Understanding debt

The rise of buy now pay later services would have you believe that younger generations have turned their back on bank loans forever, but traditional forms of lending will still play an important role in their financial lives.

The trick is to distinguish between debts that help build a better future and those that simply fuel lifestyle.

Student debt for university is generally one of the good debts, setting up a higher income earning future through better education. A mortgage puts a roof overhead and builds equity in an important asset. Carefully borrowing to invest is also a strategy many use successfully.

But credit card debt can be a threat to personal financial stability, as are personal debts like car loans.

It is important young adults tread carefully when borrowing and carefully consider what kind of debt they are taking on.

Super

Retirement must feel very distant, but superannuation remains the single most attractive way for most people to save and invest.

The tax advantages of super are well documented – contributions and earnings are taxed at just 15 per cent. Low-income earners like many school leavers can even qualify for top-up contributions and tax offsets from the government.

It is important to stay on top of super, know where contributions are going, ensure the asset allocation is appropriate and watch out for high fees.

Expect volatility

As young adults start to build an investment portfolio, saving for a car, home or retirement, one of the first lessons they learn is that from time to time, investments have a tough year. Ups and downs are to be expected.

And while accessing the share market is easier than ever with the rise of cheap brokerage accounts, sensible investing is not about collecting shares in brand name companies in a phone app.

Instead, the key to success is found in diversification and deliberate top-down portfolio construction. Top-down portfolio construction means establishing your asset allocation settings to match your personal risk profile.

Being diversified means the chance of any one failed investment hurting your overall returns is minimised.

Managed funds and ETFs allow investors to own thousands of different investments in different countries, different industries and across multiple asset classes.

Understand compounding

Finally, young investors should spend some time wrapping their minds around the power of compounding.

The concept of something growing faster the bigger it gets is strange to comprehend but that’s exactly what investments do.

Over the past hundred years, it was not uncommon for a portfolio to double in value about every 10 years. That means that after the tenth year, the accumulated returns are bigger than the amount originally invested and from year 10 onwards, the investment returns alone produce more gains than the original investment itself.

Understanding this helps young investors realise that their small investments today will drive outsized returns if given enough time.

After all, time is the biggest asset that the young possess.

 

 

By Robin Bowerman
Head of Corporate Affairs, Vanguard Australia
24 Nov, 2020
vanguard.com.au

 

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Retiring on your own terms is not always easy to achieve, however it is evident that those who plan for retirement are more likely to do so. Results also show that obtaining professional help during the pre-retirement years further improves the probability of attaining your retirement objectives.

The earlier you start implementing a plan the better the outcomes.

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Building Wealth

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The first step is to create a plan. At Wybenga Financial we take great care in getting to know our clients and their future goals and objectives. We combine our knowledge of your personal goals together with an analysis of your current situation, to create a detailed, personalised plan that will help you meet your objectives. This plan will become your road map which outlines how we are going to meet your goals, whilst aligning all investment decisions to your specific risk tolerance.

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While we are monitoring your portfolio from the perspective of your personal goals and situation, we also take into account the wider economic landscape and changes to legislation. We continually review and analyse our preferred investments in a structured and objective way. The benefit to our clients is that we are unemotional. This can be significantly beneficial over the long term.

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Personal Insurance

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At Wybenga Financial we know how to protect your wealth and will recommend solutions that best suit your needs.  Contact us today to discuss how we can work together:  02 9300 3000 or info@wybengagroup.com.au

Superannuation

Superannuation is mandatory but taking an early and active interest in your retirement planning is critical to ensuring your benefits are maximised by the time you retire.  Many will have a superannuation scheme through employment but increasing numbers are starting their own Self-Managed Super Fund (SMSF).

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Estate Planning

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Tess Uncle

B.Sc, M.Com, CA, DipFP

Tess has over 15-years experience in Chartered Accounting Firms and in this time has had a broad range of experience in superannuation, taxation, business services, and financial strategy.

Over the last two-years, Tess has turned her attention to Financial Planning, earning a Diploma of Financial Planning in 2015 and leading the newly established financial division of the Wybenga Group as a director of Wybenga Financial.

Tess’s mission is to bring the ethics and integrity of her Chartered Accounting background to the area of wealth management.

As a woman in a male dominated field, Tess is active in promoting gender equality in the industry through various programs and mentoring opportunities.

Using her depth of knowledge and experience in tax and accounting Tess is able to demonstrate a level of competence that is unique in the Financial Planning sector.

  • 2001 – Commenced employment with Wybenga & Partners and part-time accountancy studies
  • 2004 – Graduated Masters of Commerce from the University of New South Wales
  • 2005 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 2007 – Promoted to Manager at Wybenga & Partners
  • 2012 – Appointed as Associate Director
  • 2015 – Awarded a Diploma of Financial Planning
  • 2016 – Appointed as Partner of Wybenga Group and Director of Wybenga Financial

Adam Roberts

B.Bus, B.Sc, CA, DipFP

Adam has over 13-years experience in Chartered Accounting Firms and in this time has had a broad range of experience in superannuation, taxation, business services, and financial strategy.

Over the last two-years, Adam has turned his attention to Financial Planning, earning a Diploma of Financial Planning in 2015 and leading the newly established financial division of the Wybenga Group as a director of Wybenga Financial.

Adam’s mission is to bring the ethics and integrity of his Chartered Accounting background to the area of wealth management.

Combining traditional accounting and financial services has been a welcome move for Adam, allowing him to operate and advise in the financial sector that has been a long time personal passion.

Using his depth of knowledge and experience in tax and accounting Adam is able to demonstrate a level of competence that is unique in the Financial Planning sector.

  • 2005 – Graduated Bachelor of Science from the University of Western Sydney
  • 2005 – Commenced employment with Wybenga & Partners and part-time accountancy studies
  • 2007 – Graduated Bachelor of Business from the University of Western Sydney
  • 2010 – Admitted as an Associate Member of the Institute of Chartered Accountants Australia
  • 2010 – Promoted to Manager at Wybenga & Partners
  • 2012 – Appointed as Associate Director
  • 2015 – Awarded a Diploma of Financial Planning
  • 2016 – Appointed as Partner of Wybenga Group and Director of Wybenga Financial

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What is an Advisory Cadetship?
An Advisory Cadetship enables you to commence your career whilst attaining the necessary university qualifications by studying part-time.

How does it work?
Generally, our cadets complete a relevant business or accounting degree at the University of New South Wales, the University of Technology Sydney, Macquarie University, or the University of Western Sydney.

The Firm provides 3-hours paid study leave per week to attend university. This can either be taken at the one time or broken between days depending on the individual’s requirements. In addition, the Firm provides paid study leave for both mid-semester and end-of-year exams.

We take the work life balance very seriously at Wybenga Financial and our cadets are encouraged to have a fulfilling life outside the office. A typical day will have you arriving at the office at around 8.30am with most days concluding at 5.30pm.

What are the benefits of an Advisory Cadetship with Wybenga Financial?
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  • Camaraderie with other cadets – the Firm has a number of cadets at various stages of their career
  • Mentoring – cadets are paired with a senior staff member who oversees their progress and training both at work and with their studies
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  • Culture – the Firm promotes a friendly social culture with a number of functions throughout the year
  • Modern environment – including ‘socialising’ areas such as pool table and break out area
  • Training – ongoing support and technical training. We also provide internal and external training on a monthly basis
  • Remuneration – working full-time provides a market salary and independence with salaries being reviewed every 6-months

What happens when I complete my degree?
The completion of your degree is the first step of what we hope to be a long and successful career with us. The next step is the commencement of a Diploma of Financial Planning followed by completing the requirements to become a Certified Financial Planner (CFP).

There are always progression opportunities for the right cadets and we are dedicated to the long term development of our staff.

Who should apply?
Current Year 12 students or first/second year University Students who:

  • want to commence their career in financial advisory;
  • are due to commence or are currently completing a part-time business or commerce degree at university with an advisory major;
  • want to gain valuable hands-on experience while completing their qualifications;
  • are looking for a friendly working environment;
  • are team players who display initiative;
  • have a commitment to self-development;
  • possess excellent personal presentation and communication skills; and
  • are motivated and mature minded.

How do I apply for an Advisory Cadetship?
To apply for a Cadetship position at Wybenga Financial send us your details. Please also include in your covering letter why you wish to do a cadetship, include relevant qualities you possess, main interests / achievements, and any previous employment.

Interested candidates should initially forward a resume/covering letter of no more than 3-pages. Please provide full details of contact information (telephone or e-mail).

What if I have more questions?
For further information about our Cadetship program, please send your enquiry to info@wybengagroup.com.au