Now that we're at the end of the financial year, it’s time to review your investment strategies to take advantage of any potential tax benefits. Whether you're a seasoned investor or just starting out, it’s essential you do something, as we all know what happens when you do nothing.
One of my rules is never to treat a tax refund as a windfall; always treat it as savings and invest it into growth assets. So, here are my six tips to consider, as you navigate the investment landscape during this critical period. By following these tips, you can optimise your financial position and set yourself up for success.
Resist the temptation to spend and start planning now
1. Review your investment portfolio: Before making any new investment decisions, take the opportunity to review your existing portfolio to ensure it still suits your long-term goals. It’s also time to clear out the dead wood and invest your money into assets that are growing rather than holding you back.
2. Understand the tax implications of your decisions: This is a perfect time to understand and leverage any potential tax benefits you may have, which is why it pays to consult with a tax professional. If you’re an investor, it also pays to be familiar with the relevant tax laws and how you can take advantage of them in the coming year.
3. Be clear on your investment goals: If you have a partner, sit down together and ensure you document your goals. Part of this process involves working out your short, medium and long-term goals. This might include buying a home or investment property, starting a share portfolio or some other worthwhile investment.
4. Don’t over-diversify: Diversification is an overused word and often causes investors to make unwise decisions. It is more beneficial to have a concentrated portfolio rather than taking on excess risk. It also ensures you are able to achieve better returns rather than very average returns.
5. Get educated: If you're unsure about your investment decisions, then now is the time to get educated, so you reap the rewards. Don’t rely on others or luck in the hope you will make money. Gain a quality education because you will definitely be able to make better-informed decisions.
How your next financial year unfolds will be a direct result of what you do today, which will require some careful consideration. So, get educated, stay informed and above all adapt to changing market conditions.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the bestselling and award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online at www.wealthwithin.com.au