Personal Investment Strategy, Tactics and Tips

Our Aussie friends are not as fit as they’d like to be - finance-wise. Close to 1 in 3 were unsure of their financial future. And if you walk the street of Sydney or Melbourne, every other person you meet would have no idea how to plan for one. This is indeed alarming for our friends in the lucky country.

Australia: Australians fail financial fitness test, survey finds, Canberra Times, 6 December

AUSTRALIANS are being urged to add ”financial fitness” to the top of their New Year’s resolutions lists after research found that many were failing to focus on their fiscal wellbeing. A survey commissioned by banking services giant Citibank has found that many Australians are not saving, budgeting or seeking financial advice.

The survey of 400 adults found that 29per cent were worried about their financial future. Citibank head of sales and distribution for wealth management, Cameron McLeod, said recognising and identifying financial issues was an important first step in gaining control of finances. ”Figure out where your financial weaknesses are whether it’s an inability to control your debts, failure to stick to a savings plan, or failure to make your money work harder for you,” Mr McLeod said. ”I’d urge Aussies not to bury their heads in the sand, but to make 2008 the year to get ahead.”

The research also showed that 50 per cent of Australians save money only when they can, 22 per cent rarely save anything and only 28 per cent are disciplined enough to set aside money every time they get paid. About 19 per cent of respondents would last only one week on their savings if they lost their job and had all the usual expenses to pay. When it came to the battle of the sexes, men were found to be slightly better at saving, reporting they could last an average of 7.6weeks, whereas women said they could only last 6.6 weeks.

”Aussies should aim to have, at the very least, a large enough nest egg in reserve to deal with life’s uncertainties,” Mr McLeod said. ”No matter how much you are earning, it’s critical to pay yourself first, which means putting a little bit aside out of each pay to ensure there is some money available for emergencies.” Only 19 per cent of Australians make a monthly budget and stick to it and only 9 per cent claimed their level of financial understanding was very good. About 22 per cent said they would have no idea what to do if they were given the equivalent of six months’ salary to invest.

Mr Mcleod said those lacking in financial knowledge should buy financial books, attend investment seminars and visit websites to equip themselves to make the best choices. ”There is a wealth of information, so take control and educate yourself about your options.” The survey found that 48 per cent of Australians have no insurance, while 18 per cent said they only had life insurance. Those aged 18-29 were the least likely to have any insurance.

Mr Mcleod said he found the ”laissez-faire” attitude to insurance ”downright alarming” and urged people to prepare for life’s unpredictable turns. He called on them to better plan for their future after the research revealed one in two Australians, or 51 per cent, either have no idea how much they need to fund a comfortable retirement or have not started planning for it. ”Getting in early, developing effective habits, then taking ongoing steps for retirement is the best way to have a smooth transition from working life to retirement and ensuring you can maintain your current lifestyle.”