Are you questioning whether you should be making investments or saving? Then you need to look at your financial situation closely. This will help you to identify how you go about building your savings or making investments such as buying crypto in Australia or automated investments through pension schemes.
Set Your Goals For Saving
Before you consider investing you need to ensure you know how much you need in savings to be secure. Set yourself a budget and a savings goal this way you will be able ot see a clear picture of your overall finances and figure out where you can cut costs or afford to make investments. Make sure you:
- Create an emergency fund – it’s important for you to have a decent emergency fund before you think about investing. As a general rule, three months of saving is sufficient.
- Save consistently- Once you build the savings you need to make sure you do it on a monthly basis and stick to it, even if you can’t stick to the same amount, make sure you put something away every month. Just a tenner is enough to see a difference over a few years.
If you have debts to pay, make sure you pay them off first. You should also make sure you get life insurance and a pension plan in place before you decide how much to save every month.
Are You Ready To Invest?
Whether it makes sense to invest or not, will depend highly on your goals, as well as depending on their length.
Anything that will take no longer than five years. You will usually save into a cash deposit such as a bank account. Investing might not be ideal for a short-term plan.
These are generally between five and ten years long. Maybe you are saving for house purchase but need longer than five years to gather the deposit. It might be wiser to put your money into a savings account. Some people may consider investing during this time frame but make sure you are willing to lose whatever you put it.
These are usually those that are longer than ten years. Retirement is usually what appears in this area, and if you are nearing 30 you may want to think about investing in your retirement plans. If you want to have a comfortable retirement and you are planning on retiring by the time you are 60 or 65 then your thirties is the perfect time to start investing in your future.
Of course, you may have several different financial goals and many different opportunities to invest but you need to ensure that you are both financially secure and making the most of your investment opportunities.
They will all have different timescales, and you will have different priorities at different points of your life. So, make sure you create a plan and stick to it.
Hopefully, this guide has helped you star start thinking clearly about whether you should be saving, investing, or maybe both in the future. What are your plans? Please share some of them in the comments below.