Tips and Tricks – Understanding Investing for Beginners

There are many ways to invest money that will get you a return. Understanding investing for beginners means understanding that some investments can take years to return a substantial profit, but you will be rewarded. One of the most important Investment strategies is to start saving now. Putting away a small amount each month will mean you can soon put your money towards an investment. Understanding investing for beginners may mean speaking to a reputable investment advisor to understand the different investment techniques there are. They understand the right strategies and with their tips and tricks they can help make investing a whole lot easier and more profitable as a beginner. Real estate may be a more costly investment, but you can seriously make a lot of money renting out your property to tenants. Gold is another physical asset that still holds real value in the 21st century and buying coins or bullion bars can be a smart investment. Investing is big business but you’ve got it in you to make play out of work.

Understanding investing for beginners

Tips for making saving a habit

making-saving-a-habit

Making saving a habit helps to prepare for good and bad times. However, when you are not making saving a habit, you are exposed to debt risk. The debt instruments present in the market are very expensive. It is really hard to get rid of the debt, and you will land up in a vicious cycle of a debt whirlpool. Low-interest rates of saving accounts is another factor that makes people move away from saving towards spending. But once you land in debt, the realisation of the high cost of lost savings habits comes to the fore. Inculcating saving as a habit is very easy when done daily, and you can start by having the old piggy bank and putting in all the coins you have in the pocket daily. This can be a good start, and then you could put aside a percentage of your paycheck every month in your saving account and forget about it for a year. This can be done until you have a substantial amount in your saving account. Then go to the next level and invest long term in bonds, debentures and shares. Take the advice of a financial market expert and always invest long term. This means forgetting about the invested money for at least 5 years. You will be really surprised with the returns. But remember to keep doing the small things, like collecting coins where you started in the first place.

How much to invest monthly out of paycheck

Investments have become very popular in this day and age, and most people are doing it to subsidise their monthly incomes. There are many factors that one needs to consider when it comes to investment ventures such as where to invest? What to invest in and how much to invest monthly. How much to invest monthly will be determined by the amount of money you earn and your monthly expenses, but generally, no amount of money is too small for you to invest. The most important thing is to first develop the habit and learn what dividing your paycheck will entail. You should definitely decide what you want to invest in first before dividing that hard earned paycheck; the options vary and will include stocks, pensions, treasury bonds and real estate. This decision will help you determine how much to put aside every month. Sometimes even an investment of as little as $25 to $100 a month can make a very big difference in the long run. Don’t be shy try and develop an investment habit this month. Start dividing the paycheck and watch your financial future soar.

How much to invest monthly<img

Saving vs Investing – Which is right for me?

Saving vs Investing Money Growth

Saving money Vs Investing Money is a question that every Australian has to ask themselves. Saving vs Investing is a daunting question, however, it can be simplified by understanding that they are basically stepping stones from one to the other. Before you start to invest you have to learn how to save.

Just like you have to learn your ABC’s before you learn to read. Knowing how to save before you start to invest ensures that the more money you make through investments, the more money you can save. Saving vs Investing? Saving money in the right account is a good way to start your investment journey. Choosing a high-interest account to save your money means that you will receive a good rate of return on your savings. For example, if you have $4000 dollars sitting in your everyday bank account doing nothing, then you will generate zero interest. However, if you move that money into a high-interest account you could earn up to 4% per annum on your savings, or $160 per year. Investing in property is the next logical step in Australia, as our property market is quite stable. You will receive a return on your investment through rent or a rise in the market. From the property market, you may want to branch out into shares; a financial advisor can assist you with this. Shares will give you a return through dividends and a rise in stock prices. Whatever you choose to do with your money it is always a good idea to set up a serious savings history with a bank first.

This way your credit history will reflect the type of financial stability that you have and give you more options when it comes to the question of saving or investing.

How can I save money fast

How can i save money fast
How can I save money fast? This is one important question everyone on tight budget has always on mind. Given the size of Australia, there is every chance that at some time or the other you are going to have to be travelling by air. My husbands travels a lot for his business but for anyone else getting around, taking the no-frills approach is the only way to get around if you’re someone who works to a tight budget. Tigerair has cheap domestic flights and Jetstar has their Friday Frenzy deal where you can get a really cheap flight for less than $20. When not flying, my husband still needs to use his car a lot. Everyone wants ideas on how to be able to still get around by car without spending a fortune on petrol. How can I save money fast when travelling by car? By remembering that Tuesdays and Wednesdays are the cheapest days to top up on fuel. I always avoid buying petrol over the weekends. As a mother of twin boys, let me know if you’ve got any ‘getting around Australia’ tips that really work for you.

Economic Indicators for the New Year

Economic indicators for New Year

2015 is gone and the New Year is here. So how has the Australian economy fared in the past year? Taking a look at the last report from the government the major indicators are:

  • GDP Growth rate
  • Unemployment Rate
  • Inflation rise
  • Interest Rate
  • Balance of Trade
  • Government Debt to GDP

GDP Growth rate – The last quarter saw a rate of growth of 0.9 % which is a rise from the last quarter of 0.2%. It indicates that there has been an increase in economic activity in past quarter leading to the rise. Good news for the coming New Year.

Unemployment Rate – Here there has been a decrease, meaning is positive for the economy. There has been a steady monthly decrease in unemployment rate.

Inflation Rise – The inflation rise is zero meaning it remains static at 1.5% just like the last quarter. This is an indicator of the robustness of the economy.

Interest Rate – This is also stable at 2% a good indicator of stability of the economy and banking systems.

Balance of Trade – Australia has fared well in Exports and imports in the past year, but the down point is the negative balance of trade. There has been increase in imports more than exports in the last two months. The -3305 AUD figure is testimony to the fact that Export growth has declined in last quarter.

Government Debt to GDP Ratio – There has been a slight change in the ratio with arises from 30% to 33% which indicates that the government is spending more on debts in the end of the year.

Understanding Assets and Liabilities

Assets and Liabilities

  • Unfortunately many business owners think that by only increasing sales, profit can be increased. However there are other ways to increase profit apart from increasing sales.
  • Profit can also be increased by sourcing cheaper funds and strategically using it to acquire performing assets.

 Every business should understand two things:

  1. Liabilities (borrowed money) are not free. Money borrowed today has to be repaid in the future. There is no liability which does not have a cost.
  2. Every asset will have a corresponding liability. Businesses should realize it does not possess any asset.
  • Let us suppose a fully operational café has 100 assets. It will include both Performing Assets (PAs) and Non-performing Assets (NPAs).
    • PAs are assets that directly help a business in bringing profit Eg: Coffee machine, toaster, oven and so on.
    • NPAs are assets that indirectly help in bringing profit to the business Eg: Tables, chairs, and so on. Non-performing does not mean it is not essential. It is essential, but it will not directly help in bringing in profit to that business.
  • Assume the cost of borrowing to acquire those 100 assets is 10%. So to make profit this café has to earn more than 10%. This means Performing Assets (PAs) should generate a return of more than 10%.
  • Let us see what happens if ratio of PAs: NPAs varies.

If 100 assets are performing assets then to make profit the performing assets should earn more than 10% to make profit. If performing assets is 75% and 25% are non performing assets, then the performing assets has to generate more than 13.33% to make profit. If the PAs (Performing Assets) and NPAs (Non-Performing Assets) is 50-50 then PAs (Performing Assets) will have to generate a return of more than 20% to make profit. If PAs (Performing Assets) are just 25% and 75% are NPAs (Non-Performing Assets) then the PAs (Non-Performing Assets) will have to generate a return of more than 40% to make profit.