Financial PlannersNews Financial Strategies For People in Their 20's and 30's

3 Strategies People in their 20s and 30s can Use to Get Ahead Financially

In Perth, it seems like clients asking about financial planning are getting younger and younger. Many Australians in their twenties and thirties are already solidly on the way to retiring at the ages they choose to retire. We can’t give any specific financial advice without an individual consultation, but here are three strategies that can help a younger person get ahead.

Setting Financial Goals

The foundation of any financial plan is the goals. Once a person knows where they want to go, it is a lot easier to start taking steps to get there. We usually have our clients set short term goals, mid term goals and long term goals with the option of evolving them at any time.

The short term goal could be to start a savings account or purchase a first home. Mid term goals could be to own an investment property or pay for children’s college educations. The ultimate goal usually to retire at a specified age with a specified income.

Paying Off Personal Debt

Personal debt, such as store cards and credit cards, is expensive. The sooner expensive debt is paid off, the sooner a person’s money can start working for them as investment capital.

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Financial PlannersNews Diversification to Reduce Risk and Volatility

Diversification to Reduce Risk and Volatility

One of the fundamentals of good financial planning is diversification. Even in a market like Perth, which remained somewhat insulated from the worst of the Global Financial Crisis, all segments and sectors are subject to ups and downs. When a portfolio is subject to the ups and downs of any particular market, the dynamic is referred to as “volatility.”

While most markets are subject to ups and downs, it is a rare occurrence when every single market goes down at the same time. In a diversified investment portfolio, the investor isn’t affected as badly by one particular market going down, because the others usually don’t. Occasionally, when one market falls, another rises.

Diversification can provide a form of protection for investors and usually allows them to wait for any particular market to go back up.

How it Works

The popular way to diversify is to invest across asset classes. Examples: cash, fixed-interest bonds or securities, properties, shares and precious metals. Each class has its own risk to reward profile. Those with low risk and low reward, such as cash, are the least volatile. Those with the highest risk and reward potential, such as shares, are considered to be the most volatile.

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Insurance ProtectionNews How to Afford Insurance for the Long Term

How to Afford Insurance for the Long Term

We currently provide life insurance and disability insurance to many of our Perth area clients. They are two popular forms of wealth protection. Many people think they “can’t afford insurance,” but it is possible to afford it now and later, depending upon how you choose to pay your premiums.

There are two basic ways to pay for insurance: a stepped premium and a level premium. Here’s how they work.

Stepped Premium

A stepped premium starts out low and increases as you age. It is most often chosen by those who expect to make more money in the future than they do now. Ideally, younger clients on a career path find their income rising as their premiums rise. If their careers go as planned, the stepped premium can work out very well for all parties.

Level Premium

A level premium is higher at first, but tend to remain stable over the years. The premium is calculated each year, based on the age when you first took out the policy, no matter how old you are. This avoids the sharp rise that often happens with a stepped premium.

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Financial PlannersInvestment PlanningNews Risk Vs Return

Managing Risk vs Return

Those who are looking for financial planning help in Perth are bombarded with unsolicited advice on a daily basis. At Approved Financial Planners, we don’t give advice on our blog, but we can educate consumers about their choices and what they may want to consider when looking for a financial advisor.

When we have an individual consultation with an investor, one of the most important considerations is their risk tolerance. We find out how comfortable a client is with risk so that we can create a financial plan that they can live with. A client who is uncomfortable with risk is going to be steered towards a more conservative approach. A client who is comfortable with risk will be steered into a more aggressive approach.

Generally, the higher the risk of an investment, the higher the potential reward. This is a fundamental of investment. However, some strategies are commonly used to shield even an aggressive investor from undue risk.

Long-Term Timeframe

Long term investments carry less risk because fluctuations in any market tend to even out if one waits long enough. This doesn’t work 100% of the time, but time can be considered to be a valuable asset in investing.

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Financial PlannersNews Where to Get Financial Advice

Where are You Getting Your Financial Advice?

We have provided financial services in Perth for nine years. In that time, we have built a track record based on honesty, integrity and results. When we get to know a client through an introductory consultation, one of the things we start out with is asking if they have done any investing yet.

Sometimes, we hear stories about how they got “advice” online or from well-meaning friends and it didn’t work out. We also hear stories about how they were “sold a bill of goods” by various financial advisors who provided “advice” that was just a cleverly-disguised sales pitch and was in their own self-interest.

Recently, a study led by Susan Thorp, Professor of Finance and Superannuation at the University of Technology, Sydney, indicated that financial advisors who give solid advice on the first issue are usually trusted, even if their later advice turns out to be bad. The study goes on to mention that there is potential for abuse by unscrupulous advisers who manipulate the process by providing easy, obvious advice to gain a client’s trust.*

Ms Thorp goes on to concluded that consumers “need more assistance in choosing advisers.” She also advocates tougher tests for certification as a financial advisor. Those who are interested in the full report can click the link at the bottom of the page.*

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Mortgage BrokingNews Ready to Buy Your First Home

Are You Ready to Buy Your First Home?

One of the least-rewarding duties of mortgage broking, especially in a market like that of Perth, is informing a would-be client that they have been turned down by the lenders. We can’t give specific advice, but we can provide some general reasons why would-be homeowners may want to reconsider their decision to purchase their first home.

Insufficient Funding

Purchasing a home requires a substantial financial outlay. The first obstacle is finding ten percent for the deposit. After the deposit, it is then necessary to sustain a lifestyle that allows finding the capital to make mortgage repayments on a regular basis.


Sometimes, a person’s lifestyle isn’t amenable to purchasing a home. Someone who is single and on the road for work most of the time may have a hard time keeping up with maintenance concerns. In addition, those who need the flexibility to transfer or relocate may have a harder time doing either when they own a home.

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Financial PlannersInvestment PlanningNews Mistakes By DIY Investors

Five Common Mistakes Made by Neophyte and DIY Investors

When it comes to financial planning, many Perth residents have a “can do” attitude. It seems like a lot of people try to go the “DIY route” when it comes to making investments. While this is admirable, investing is complicated and competitive. Amateur investors often find themselves competing against professional investors who invest for a living. It is easy to guess who usually wins and who usually loses in this scenario.

Here are five common mistakes that DIY investors make.

Failure to Calibrate Goals

The two most common variations of this are too many goals and unrealistic goals. The most common is expecting to much of a return in too short a time with too little to invest. Often, people set a budget that leaves them a miserable current lifestyle. Eventually, they can become bitter towards their budget and derail their own investment plans.

Failure to Invest Sufficient Time and Effort

It takes time and effort to create a budget and an investment plan, with or without a professional investment planner. This could also be called, “Failure to treat investment like a business.”

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Financial PlannersNews Habits for Effective Retirement

Five Habits for Effective Retirement

As the baby boomer generation ages, retirement planning is becoming a common expression around Perth. Some started planning early and some are in the “better late than never” category, but it certainly seems like Australians are paying more attention to what they need to do to retire comfortably than ever before.

While a lot of Australians still use the default superannuation funds from their workplaces, the self managed superannuation fund has become more popular every year. Many Australians also choose not to self manage, but to choose from many of the super funds that are available instead of using their workplace’s default super fund.

We can’t give specific advice to anyone without an individual consultation, but we would like to present five habits that those who are on the way to effective retirement have in common.

They are Actively Planning their Retirement

I have heard these two sayings often: “It’s never too early to start thinking about retirement” and “It’s never too late to start thinking about retirement.” While it is much better to start as early as possible, even someone close to retirement age can benefit by talking to a financial planner about retirement.

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Financial PlannersNews Financial Tips from Financial Planners Perth

Financial Tips for Singles

It’s never too early or too late to listen to one of the financial planners in our Perth office. It’s also never too early or too late to become financially responsible. Many people are under the misconception that it is more difficult for singles to be financially successful than couples.

We think that single people have plenty of opportunity to be successful. While it can be more expensive for singles to live due to only having one income instead of two, they also get to be the sole decider on where the money goes. This more than makes up for the expense of living alone.

Here are some financial tips for singles based on their generation or age. Please remember that all information is general in nature and does not constitute advice for anyone’s specific financial situation.

Generation Y

Gen Y people are still fairly young but are rapidly becoming much more financially accomplished than any other generation in history.* The most important things for a Gen Y single to do are to start living on a budget, protect their income and avoid expensive debt such as credit and store cards.

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Financial PlannersNews Money Mistakes to Avoid

Money Mistakes to Avoid

There are certain patterns or money mistakes that Perth financial planners see on a regular basis. Once we have put them on a program, those mistakes usually don’t occur as often as they used to. Remember that all financial suggestions here are general in nature and that we can’t specifically give advice to anyone’s individual financial situation without a consultation.

Settling for What You Get

This is in reference to bills and premiums. Many companies give new customers great deals but won’t extend the same courtesy to their current customers. They are counting on you to stay put and not complain. Meanwhile, it is possible to save thousands just by changing the mortgage on your home. It pays to shop around.*

Spending More Than You Earn

Credit cards make it too easy to spend money you don’t have, putting yourself in debt and paying high credit card interest rates. This is a very common malady.*

Having No Emergency Fund

It is wise to have at least three months’ worth of expenses saved up in an emergency fund. It is better to have six months’ expenses. A lot of Australians are still living week to week, leaving them vulnerable if they can’t earn money for even a month. *

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