Portfolio

Savings and Investments – Focus on Finanical Freedom Part #6

In our last session we discussed How to Pay Yourself First, this week we will cover savings and investments. With regard to savings and investments we suggest that you determine your attitude to investments and decide on an investment strategy that works for you.

Treat your investments as you would your business. Ensure that your investments match your strategy and outlook to risk.

If you have the necessary expertise then ensure you block off adequate time each week to devote to your investment strategy.

This strategy will have a huge bearing not only on how quickly you attain Financial Freedom but that you remain Financially Free.

If you don’t have the necessary expertise pay for it or alternatively move to an area where you are more proficient

Remember the power of compound interest.

Albert Einstein once noted that the most powerful force in the universe was the principle of compounding. In investing, this manifests itself through something called compound interest. Put in its simplest terms, the phrase compound interest means that you begin to earn interest on your income, resulting in your money growing at an ever-accelerating rate.

Benjamin Franklin famously explained to people that it was the best way he knew how to get rich.

Three Things That Wil Determine Compound Interest Returns

  1. Interest rate earned on your investment or, alternatively, the profit you earn. So for example with shares this would be your total profit from capital gains and dividends.
  2. The length of time you can leave your money to compound.
  3. The tax rate, and the timing of the tax. Obviously the less tax you have to pay the more money you’ll end up with.

Attached is a short workbook that will help you record your thoughts on this. This is something you can review every few months. Access the workbook here

 

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For related enquiries, further clarification and assistance with Tax matters contact Joe Cunnane at TRA Professional Services

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Joe Cunnane Practice Owner TRA Professional Services       Qualifications:  FCA Chartered Accountant & AITI Chartered Tax Advisor Joe has over 20 years experience working in both private practice and industry ... Read More »