Build Wealth in Australia

To build wealth in Australia requires an understanding of the legal, regulatory and financial environment and framework in Australia. It requires expertise from your financial adviser and discipline from you. It is very achievable.

Having an objective to build wealth or create wealth, involves organising your financial affairs and circumstances at the intersection of home ownership, property investment, superannuation, investments and prudent debt management.

Further the kinds of considerations in undertaking financial planning and financial advice vary by age. The types of strategies to build wealth will change between your 20s, 30s and 40s, although the strategies often overlap and evolve.

Contact Setch today to start you on your journey to build wealth by clicking here.

Home ownership has been a strategy that has helped Australians do better financially by building wealth through the growth in equity in the home from two sources: historically Australian property prices have increased so this helps the homeowner to grow equity; and over time the home mortgage is typically paid down creating wealth. 

The performance of the Australian property market has resulted in Australians deploying property investment to build wealth. As an example we find that many Australians in their 20s and often their 30s are able to rentvest referred to as rentvesting. This occurs where the person buys a property where they can afford and often in growth locations, and rent where they want to live for the time being and are able to build wealth in the acquired property. 

It is a way to get your feet firmly on the property ladder, and obtain potential tax benefits from negative gearing or cashflow from positive gearing, as well as other potential tax benefits (such as depreciation). 

While it is never too late to start to accumulate wealth or to develop a plan to build wealth, the earlier you start the better and the kinds of strategies available and the approach to financial planning will change with age.

Australian super performance over the long term has been strong, and it is an important aspect to creating wealth. Working Australians generally receive superannuation paid into a super fund by their employer or business referred to as superannuation guarantee levy. The contributions to super are taxed at a lower rate usually than the person’s marginal tax rate, and for some clients and their spouses or partners there are other government incentives that make taking financial advice worth it. 

Further the returns on super are often taxed at a lower rate than the person’s marginal tax rate, and understanding how this works with the benefit of franking credits is valuable.

As such, super is an important way to build wealth. When you think about super it is important to have in mind that it is not market timing so much but the length of time in the market. For this reason people in their 20s, 30s and 40s have an advantage over other age groups because they can contribute capital into super over and above the superannuation guarantee levy known as salary sacrifice or personal contribution. This enables you to build wealth tax effectively and have the benefit of compounding returns.

Albert Einstein said: “Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it”. At Setch, we position our clients to earn it through superannuation and investment, and through prudent debt management and understanding good debt versus bad debt positioning yourself to limit paying it.

Financial planning and advice is worth it, because there are government programs to allow you to build wealth in super and use this wealth as a deposit for property investing. For some of our clients that have other capital to invest, whether through savings, or inheritance, we are able to advise on how to invest the capital to build wealth.

As an example, when you are in your 40s we can evaluate different strategies and scenarios to enable you to make wise decisions with your property investment, mortgage reduction strategies and superannuation. We find that we are able to work with our clients to provide the tools and recommendations that enable them to build wealth and create wealth, and apply our expertise to develop different strategies for our client’s in their 20s, 30s and 40s.