Firstly, congratulations to you for actually doing it and taking control of your life by being self-employed and working for yourself. I salute you, because I know it’s not the easiest of paths to take. The struggle can be very real sometimes, but you know deep down that the juice is, or will be, worth the squeeze.
When you work for yourself and you’re generating your own income, the beginning can be tough. Income can be uncertain and erratic especially at the start of any new business. And if you’re in the start-up phase, you’re probably not thinking about your retirement, yet.
But it is worthy thinking about now, because even though you’re not required to contribute into Super, down the track, this might mean you won’t have enough to retire on. Which I’m guessing is a very different vision to what you had in mind to live out your Golden Years.
As a business owner, your business is your retirement nest egg, in addition to anything you may already have in Super. But relying on the growth of your business to retire in the sun, is a risky business itself, so it’s useful to diversify your investments so you have a couple of money pots growing to make you a nice nest egg. Sound good right? So, what are your options?
Firstly, it’s smart to save in Super. Making small, frequent contributions into your Super will make a big difference when you retire. Start with a small amount each month that you can comfortably live without and increase it each year as your business grows. It sounds boring, but Super is an excellent forced savings plan with better-than-the-bank returns and tax benefits too.
Investment Portfolio Platforms
Your second option sits outside of your Super account and is to have an investment portfolio that you can trickle money into, that is invested by the company and gives you compound growth on your return each year. There are many platforms, companies and options, of which I’d be happy to chat with you further on, to take into consideration your actual circumstances.
A popular platform in Australia is Raiz* (formally known as Acorns). Raiz is an investment company that offers a couple of options, including an app that automatically invests your spare change from your every-day purchases.
For example, if you buy a latte for $3.50, then platforms like Raiz can automatically round this up to $4.00, using the 50 cents to invest into an online investment portfolio. You can also contribute your own money to get kick-started to invest more but do your own research as there are admin fees to consider and terms and conditions are subject to change. Generally speaking, the fees for this type of service shouldn’t cost more than 1% of your balance.
There are a lot of different investment options inside Super and outside of Super to help you build your nest egg and get growth out of your cash, so you can retire with a cocktail in hand on that dream cruise you always wanted, not worrying about every dollar.
Book in your free chat today, to work out what’s best for you and your business.
*This is in no way a recommendation to use Raiz, just an example of one of the many providers out there. If you are interested, do your own research and book in a chat to ask me any questions. And for transparency, I don’t receive a single cent from Raiz for mentioning them in this article.
General Advice Disclaimer
This blog contains general advice only. You need to consider with your financial planner, your investment objectives, financial situation and your particular needs prior to making any strategy or product decision. InterPrac Financial Planning Pty Ltd and its authorised representatives do not accept any liability for any errors or omissions of information supplied in this document except for liability under statute which cannot be excluded.