Planting Money Seeds – Part 1

Investment guru Warren Buffett once said that ‘someone is sitting in the shade today because someone planted a tree a long time ago.’

He was referring to the need to plant financial seeds (in other words, to start making wise investments) as early as possible in life, so you give yourself the maximum time for them to grow and provide you with shade (financial security and freedom) later in life.

How money seeds can provide you with financial shade

There are two ways that planting money seeds can provide you with financial shade:

1) by providing you with capital growth opportunities.

2) by providing you with income-earning potential.

Some investments provide you with both capital growth and income-earning potential, while others provide you with one or the other. For example:

  • a residential property provides you with the potential for capital growth over time, but generally not any income-earning potential. The Australian property market has a long-term growth trend, although there can be times when market values stagnate or decline like they currently now are in some Australian markets.
  • an investment property in a good area provides you with both capital growth and income-earning potential. You can earn income by renting the property out to tenants. You can also reduce the amount of tax you pay by deducting investment property expenses from your taxable income. Those tax-deductible expenses could include loan interest, council rates, insurance and property manager fees, as well as repairs and maintenance costs.
  • quality shares can increase in value and they can also provide you with income in the form of dividends. Like the property market, the Australian share market has a long-term overall growth trend, although there are times when the market stagnates or declines. The most recent significant downturn was during the global financial crisis (GFC) of 2007 and 2008.
  • cash-based investments can provide you with income in the form of interest. However, interest rates are currently at record lows in Australia, making this investment sector less attractive at the moment.

When choosing your investments, it’s important to understand your financial needs and goals, as well as your risk profile. Your risk profile is how much investment risk you’re prepared to accept. Some investments (like speculative shares) are riskier than others. Others are low-risk (like cash-based investments). In general, the higher the potential return, the greater the risk.

How we can help

At Qi Wealth, our team of financial advisors can help you to plant your money seeds so you can take control of your financial future. We’ll take the time to understand your needs and goals so we can provide you with the best possible advice.

We’re constantly analysing investment markets, cycles and trends.  Our team can advise you on a wide range of investments and risk management techniques. We can also help you to manage your investment portfolio as it grows over time. We develop long-term, trusted relationships with our clients.

Contact us today to find out how we can help you!