Top 5 Questions People Ask a Financial Advisor

Anthony Bell

Finance Expert

Helping people with their wealth for such a long period has provided a great deal of knowledge and learning around the habits and strategies that create and protect wealth. While there are no silver bullets and magic tricks to make someone wealthy, there are proven techniques and actions one can implement that will set them on the path to wealth. Quite often we are asked the same questions about money and below are the top 5 questions that are asked:

1. Should I invest in shares or property?

At the end of the day both assets are perfectly placed to help you build wealth over the long term. There are just as many examples of people making money out of property as there are shares and the real answer as to where you should invest will come down to how much money are you able to/willing to invest and how prepared you are to watch your investments change in value. Unlike shares, property prices are not quoted every minute of the day, hence providing greater peace of mind for those who may not like to see the value of their investments go up and down all the time. On the flip side, shares are easily bought and sold with transaction costs far lower than buying a property. You also need to have larger sums to invest when it comes to property as compared to shares where you can get started with as little as $1,000. Quite often people start out investing in shares and when wealth has grown sufficiently large enough they are able to move onto property.

2. Where can I invest for a quick return?

The old saying “the higher the risk, the higher the return” applies here well and truly. Unfortunately though, with investing any promise of a quick return is loaded with danger and an extreme amount of risk. Anyone who is prepared to invest for a quick gain needs to accept the outcome of a quick loss of capital as well. Unless you are extremely lucky you need to be prepared to invest for the medium to long term to gain the benefit of capital growth.

3. Do I invest in Superannuation or pay off the mortgage?

The answer to this question depends on several factors, the main one being your time frame to retirement. If you are younger and have a mortgage you are always better off paying your home loan down. This is due to the fact that you have to reach the age of 60 before accessing your money and this means you are paying more interest to the bank than you have to. As your mortgage reduces and takes less of your income you can then direct that surplus into your super fund for retirement.

4. How do I save money?

This is a common question that is asked as it appears more people are finding it hard to save for a home or future goal than ever before. With the increase in property prices and the costs of living, we have to stretch our hard earned money even further. The best savings plans use techniques such as directing pay to a separate bank account with no immediate access to create the habit of only spending what you have available. Using an on line savings account with no ATM or credit card facility is the best method of saving and investing.

5. How do I pay less tax?

This is a problem all working Australian’s would like to solve. In our country where the top marginal tax rate is pushing 50% it is even more prevalent today that people would like more of their hard earned money available for themselves. When it comes to saving tax on our salaries, negative gearing as a strategy can be beneficial. That is using borrowed money to buy investments such as shares and properties. The advantages are 2 fold when borrowing to invest. Firstly, you have the advantage of leverage which increases the amount you have to invest. Returns can be amplified on your original investment and conversely losses are also magnified. Secondly, you receive a tax deduction on the interest you pay for the loan. This deduction provides some relief on tax payable, even helping the servicing of the loan.


Feature Image via CoachingwithChristina

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