The Lowdown On Every Financial Goal You Think You Need (And Those You Don’t)

If you’re just entering the workforce or have recently been promoted, it can be hard to know what to do once those paycheques start rolling in. Chances are, you’re earning more than you ever have before and now it’s tricky to know where you should be putting your money. While we’d all love to dash off on an extended trip or spend it all on a new gadget, there are some responsible alternatives to consider. Nifty has investigated how you can meet your financial goals!

Investments, shares, salary sacrificing – you may have heard these terms thrown around before but what should you prioritise? Should you invest in shares now or buy a house first? What about education or super? There’s plenty of ways you could start setting yourself up for the future and it’s important you think these through. For women especially, the wage gap places them at a disadvantage with increased risk of poverty later in life.

Here, Nifty investigates the benefits and disadvantages of where to put your money as well as what it means for your situation. Don’t sweat it, we’ve got the top tips you need to read!

Buying A House

Homeownership has long been part of the ‘Australian dream’ and as an investment, it seems like an obvious option. Granted you eventually pay off the mortgage, a house can earn you considerable money from rent should you choose to one day lease it. Plus, if you own your own home before you retire, it puts less financial stress on you when you’re older.

Yet, there is a lot to consider before buying property – including your current finances, employment stability, long-term goals, relationship status, and more. Ultimately, you should think about your appetite for risk and reflect on whatever stage of life you may be in. After all, if you’re just starting your career are you sure you want to be saddled with as large a commitment as a mortgage?

The Key Benefits

  • Homeownership provides financial stability in later life
  • A house can one day be used as equity
  • It’s an asset that usually increases in value over time
  • Average return on investment now rivals the sharemarket
  • Owning an investment property comes with generous tax advantages

It is important to establish what your financial goals are!

The Core Disadvantages

  • It’s expensive to buy property!
  • If you get into financial trouble, you risk ruining your credit rating
  • Prices can drop, meaning your house could depreciate in value over time
  • Owning a house may require you to sacrifice other experiences (i.e. holidays)
  • Additional costs – initial fees, interest, rates, maintenance, bills, etc.

Purchasing A Car

For most of us, buying a car is more of a necessity than an investment. Since a car loses its value pretty much as soon as you take it from the dealership, it’s not an obvious choice for an investment. However, the convenience it affords may make it more of a long-term investment, saving you on time.

If you’re choosing between purchasing a car or a house as a financial goal, it should come down to your savings and your needs.

The Key Benefits

  • More freedom and easy mobility
  • Highly useful

The Core Disadvantages

  • Depreciates in value over time
  • Won’t last you a lifetime
  • Expensive upkeep – registration, insurance, fuel, etc.

Investing In Shares

When we think of shares and stocks we tend to conjure up the Hollywood depictions of men in fancy suits living on the edge. The reality is, though, investing in shares doesn’t require you to ‘give all or nothing’ and can be a great financial goal. If you do your research and take the time to speak with appropriate financial advisors, you can see your money grow considerably over time.

The trouble is, it’s very difficult to pick out which stocks will out-perform the market. As a result, the key is to start out investing small amounts and playing it fairly safe until you’ve learned more.

The Key Benefits

  • Don’t need to invest large amounts to start with
  • Tends to produce high returns long-term
  • Faster and easier to sell shares and access your cash
  • Can take bigger risks when you’re familiar with the markets

The Core Disadvantages

  • Requires a lot of research
  • Fees apply to buying and trading
  • Returns can fluctuate, sometimes dramatically (resulting in significant losses)

Starting a Side Hustle

With plenty of people making a living online now, the idea of starting your own business might be an appealing thought and could also help you reach a financial goal. After all, most of the richest people in this world are entrepreneurs who took their passion projects to new levels. So, obviously, there’s potential for huge monetary gains. It can also be super rewarding for some of us to invest in our side hustle and build it up in our spare time.

Naturally, however, there’s a lot we can risk when investing in our passion projects. Like any financial decision you make, it’s important you consider all the variables. Among other things, you will have to think about the viability of your product/service, tax implications, insurance costs and compliance expenses. Unfortunately, there are far fewer success stories when it comes to side businesses so you can’t be certain how much money you will make. It is important to establish the financial goals of your business and have a clear plan in mind.

The Key Benefits

  • Gives you multiple sources of income
  • Can offer plenty of personal satisfaction
  • Creates rewarding learning experiences
  • Can result in more opportunities for yourself

The Core Disadvantages

  • Initial set-up costs
  • Typically risky – small businesses tend to fail within the first 3 years
  • Very time consuming
  • Usually generates a low income (especially to start with)

Investing in Education

Furthering your education may not sound particularly enticing when you’re looking to make money and not spend it. Yet, there are definitely some advantages to a good academic background. Ultimately, by developing your skills further you increase your employability. Plus, if you’re considering a career change, heading back to ‘school’ can help assist you in your transition.

Statistically, university graduates can also earn around $800,000 more in their lifetime. So, if you’re young investing in education now can have substantial returns in the long run. However, disadvantages tend to arise when you start looking at different industries, their current employment levels, and how much your studies will cost overall.

At the end of the day, investing in your education will require you to weigh up the potential costs and benefits it could offer you long-term.

The Key Benefits

  • Generally increases employability
  • Can improve job prospects
  • Generates new opportunities (i.e. career changes)
  • Potential for higher earnings

The Core Disadvantages

  • Very expensive
  • May increase your debt (especially if you get a loan)
  • No guaranteed job at the end of it

Leaving it in The Bank

Probably the least risky investment option in this article, there are a few ways you can invest your money in the bank. For example, you could try investing with term deposits or even just a high-interest savings account. Whatever your choice, these kinds of investments are ideal for the more risk averse.

At some stage, you should think about your goal. If you want more money in the short-term then more risky investments tend to have a higher yield. Something like a high-interest savings account isn’t going to give you much in the short-term, but it will accumulate quite a bit over time.

Although it’s possibly starting to sound a bit repetitive at this point, you really need to do your research. It really is the only way to find the right match for you.

The Key Benefits

  • Easy to track, manage & access
  • High security (little risk of money loss)
  • Fixed interest rate = fixed returns
  • Can earn money that would otherwise just sit there in your account

The Core Disadvantages

  • Withdrawal fees may apply
  • May be minimum deposits on savings accounts
  • Generally provide a smaller return than many other investments

Investing in Cryptocurrency

Although not initially developed as a vehicle for investment, investing in cryptocurrency has been a hot button topic for the last few years. We all remember hearing of the surging Bitcoin prices in 2017, but it didn’t take long for things to come crashing back down again. Building uncertainty, possible government crackdowns, scams, and a range of high-profile hackings were enough to send people running.

Naturally, as a developing area, cryptocurrency comes with plenty of risk. So, unless you’re an expert in it, it’s difficult to say which cryptocurrency will increase in value. For that reason, it’s probably wise to keep your savings in a bank account and if you are interested in pursuing it as an investment – make sure you’re well-read on it before you do.

The Key Benefits

  • Potential to make a lot of money (with the right know-how)
  • Underlying blockchain technology attracting continued investment

The Core Disadvantages

  • Not regulated so less safeguards
  • Requires serious expertise
  • Value tends to fluctuate frequently
  • Higher risk of your money being lost or stolen

More Nifty Reads

Did you enjoy reading this post? For more of the latest in lifestyle and finance updates check out our blog! Nifty Loans is an online private lender offering small personal loans to a wide range of clients. To find out how we may be able to help you secure financing, click here.

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