The starting point for a wealth creation strategy is drawing up a budget. This determines the amount required for day-to-day living expenses. It is this important step that gives us a clear indication on how much funds are available to invest, to create wealth on a regular basis.
At Investlink Group Pty Ltd we believe that by regularly investing our clients can maximize their investments and assets. Investing over a long period of time will help you take advantage of the compounding investment returns and will also even out the purchase price of those investments through the market ups and downs. This will assist in reducing the risk of investing in volatile markets. Most investors build wealth slowly over time by investing for the long-term and ignoring short-term volatility.
We can also help our clients with investments in property and shares via managed funds using borrowed monies. This strategy is referred to as ‘gearing’. Gearing can be a very effective strategy if the income and capital growth on the geared investments are greater than the costs of funding the geared investments, after taking into account any tax that may be payable. Gearing is not suitable for everyone and is a long-term strategy.
It is important to understand that both risk and return are closely related. The higher the degree of risk associated with an investment, the higher the return required by investors if they are to accept the risk. This fundamental investment principle is called the risk return trade-off, and is used as a guide to the appropriate asset allocation or diversification.
There are various strategies we can implement for our clients to create wealth. It is important that investing in asset classes such as fixed interest, property, Australian and international shares are aligned with your risk profile.