Five ways to financial freedom

Creating a personal investment plan is easier than you think. These simple tips will put you on the right path.

Feeling hesitant about starting a personal investment plan? There’s no need to be. It can be a lot simpler than you think. Many of the myths and preconceptions are quite different from the reality.

Here are five top tips to help you join the growing ranks of Australian’s on their way to financial freedom.

TIP 1. You don’t need to be wealthy

Many people have the misconception that serious investing is reserved for those with a lot of money to start with. The good news is that nothing could be further from the truth. Investing can be started with minimal amounts of capital and a reasonable commitment to regularly allocating some of your income toward your plan.

Personal investment has more to do with your attitude and willingness to plan than it does to having lots of money already. What’s more, many investment vehicles these days give you access to a broad investment mix that in days gone by would have only been available to an elite few. Talking to a qualified financial planner will help you discover just how accessible it is to start your own plan.

TIP 2. Clear goals in place

The secret to making your plan really succeed is to be clear about what your objectives are. Once you have goals in mind and specific time frames around them it is much easier to select investments that will match the goals and give the right combination of growth potential and security.

This is where a financial planner can be helpful in analysing what is important to you and helping you formulate concrete goals. This then transfers into the research and fund selection process that gives you a tailor-made strategy and gets you to your desired lifestyle faster.

TIP 3. Use managed funds

Managed funds are a great way for individual investors to pool resources with others to achieve the critical investment mass needed to create a truly diversified portfolio.

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Have you considered using a managed fund?

These days managed funds can be highly specialised and focus on particular global regions, types of assets or types of industries.

They can also offer a highly diverse range of investments within one fund. They are also a good way for personal investors to reach markets and opportunities that can sometimes be difficult to access.

TIP 4. Create a long-term investment plan

While some of your goals might be short, a successful investment plan has a longer-term view. The people who really make strides toward financial freedom are those who understand that their investment plan is an ongoing process to which they dedicate specific regular contributions to. Reinvesting any dividends back into your plan can help you grow your wealth faster.

TIP 5. Do something now

The biggest mistake many people make with their investment plans is thinking they need to delay starting their plan until ‘the right opportunity comes along’ or ‘they have more money to dedicate to it’.

The reality is that your spending will probably always use up your income unless you have a specific plan to allocate money purely for the purpose of financial growth.

It is much better to start with a relatively small regular amount now, rather than wait until you think you’ll have the funds free to make a ‘big splash’. It is the habit and mindset that are the important drivers of success. Once you make the first small regular commitment, the motivation will naturally increase and your plan will take on a new significance, as you see the potential for financial freedom come to life.

What are your savings and investment tips to getting started? Join the discussion below.