Financial Investment: 3 Things To Consider Before Jumping In


3 Financial Investment Tips

It doesn’t matter if you’ve been working for a few years or thinking about retiring in the next 15 years or so.

Financial investment is a fact of life.

But it can feel overwhelming and even intimidating when you start exploring where to invest your hard earned money!

Before you start out on your financial investment journey, it’s important to:

  • get clear about what your financial goals are,
  • what type of investment you’d like, and
  • what risk tolerance you’ve got.


Financial Investment


1 Goal setting

When we work with our clients we suggest they write their financial goals down – from saving for a home deposit, to boosting their retirement savings.

Once the goals are written down, the next step is to give each goal a timeframe. 

If you’re Generation Y and saving for a home deposit, a regular savings plan may mean that the timeframe is short-term (up to 3 years).

If you’re Generation X and want to save money for your children’s university education, the timeframe will be medium-term (3-7 years).

And if you’re a Baby Boomer wanting to increase your retirement savings, the timeframe will be long-term (more than 7 years)

Once you’ve got timeframes written down its time to look at what types of investment choices you could make.

2 Growth, balanced, conservative and cash investment

Moneysmart defines these as:

  • Growth – invests 70-90% in shares or property. Aims for higher average returns over the long term.
  • Balanced – invests 50-70% in shares or property, and the rest in fixed interest and cash. Aims for reasonable returns, but less than growth funds to reduce risk of losses in bad years.
  • Conservative – invests 30-50% in shares and property with the majority in fixed interest and cash. Aims to reduce the risk of loss and therefore accepts a lower return over the long term.
  • Cash – invests 100% in deposits with Australian deposit-taking institutions. Aims for stable returns over a short term.

When we sit down with our clients, this information is covered in a lot more detail.

Once you’re clear on what type of investor you are, it’s time to get clear on what your risk tolerance is.

3 Risk tolerance

Risk tolerance refers to investor’s ability to cope with a drop in the value of their investments.

Everyone’s risk tolerance will be different and is influenced by their age, health and ability to recover from any capital losses they could experience.

Ask yourself, “If you woke up tomorrow and your investment balance had dropped by 30%, how would you feel?”

Moneysmart defines your overall risk tolerance as, ‘…the lesser of the risk you’re comfortable with and the risk of your timeframe will allow you to take.”

If you’d like help to get started on your financial investment journey, call us on 1300 296 388 or click here to send us an email.

The advice provided in this blog is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. For our full disclaimer, please click here.