Wednesday, 27 January 2016

Life lessons for a recent graduate

1. Your University degree will make you a living, it won't make you rich. Your University degree  doesn't guarantee you a good retirement either.
2. Self education will make you rich.
3. Climbing up the corporate ladder, social ladder and getting what you want in life come from self education. So, invest in self education, continuously improve yourself in all aspects of life: money management, financial literacy, relationships skills, people skills, etc.
4. Don't upgrade your expenses as you increase your salary. Don't start going to fine dining restaurants every weekend. Maintain a modest lifestyle.
5. Continuously invest to grow your assets: shares, properties, etc.
6. Minimise tax legally, but don't cheat (evade) tax. If in a tax audit or a tax review case, you are found to have done a mistake (honest or intentional) and as tgevresult of the mistake was a tax shortfall, you could be held liable for a shortfall penalty (ranged from 25% to 75% of tax shortfall) plus a 20% uplift and plus an interest charges accrued on the shortfalls plus the penalties (shortfall and uplift). Is this consequence worth cheating for? I don't think so. There are many legal ways to minimize tax - look up
7. Continue Investing in properties that pays itself. (You can have as many properties as you want - you can own more than 2 properties. Investing in properties is still one of the way people use to grow their wealth.) By now, after your graduation from University, you would have grown more mature and by now, you will have more options in renting out your property investment, to name a few: you can be a host parent for home stay students, be a guardian for international students under the age of eighteen, and you can rent out your rooms to these students, and in return, you will get higher than normal rental incomes. You will need to provide extra benefits to them, but the return can make it worthwhile.
8. Keep your career options open. Maintain a good professional reputation and good professional relationships. This way, if your employer doesn't provide good professional career paths, you can move on quickly by using your professional connections.
You must also increase your income by at least 5% per annum in your current company. If you don't,  it's time to say goodbye to your employer.
9. Continue investing in shares with dividends reinvested. Don't cash out. Your income, whilst you are working, must come from your salary. Dividends are for growing your wealth only.
10. Look into your superannuation  (401k) now. Explore tax efficient super co-contributions and superannuation salary sacrifice. Ensure your superannuation provider charge reasonable fees, look into income protection insurance, death and total permanent disability criteria and benefits cover provided in your superannuation, ensure your superannuation returns are on par with the benchmark  (look at APRA benchmark). Consolidate your Superannuation.
11. Continue saving for wedding, children and their education, and retirement.
12. Have sufficient emergency fund - It should be around 6 months worth of living expenses including mortgage repayments.
13. Don't accrue debts, buy everything  (if possible, properties) with cash whilst using tax minimization strategy and structure.
14. Invest your Tax Refund

©™ Kaizen Money Smartt

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