business clique
FINANCIAL LITERACY GAP
It has become strikingly
apparent how little people truly
understand about what it is to
build wealth. Few people have
been taught about the concept of
wealth creation, even amongst
successful businessmen and
women.
Sadly, this is a reflection of a
culture that does not promote
financial literacy. When we can
enlist others to manage our
finances, why should we have
to know how to do it ourselves?
There is currently a large gap
in financial education within
schools. As a result, individuals
grow to see finance as an
intellectual concept that is
unattainable to the ordinary
person. In this absence of
financial literacy, there is a
significant financial leakage and
lack of investing know-how.
This only becomes apparent
in later life, when it is almost
too late. The importance of
building an investment portfolio
and practicing smart money
behaviours is a vital activity.
Relying purely on income to
build wealth has often become
an ineffective strategy within the
modern economy.
PROPERTY INVESTING
There are many ways to build
wealth. Yet, given interest rates
are the lowest they have been
in over 40 years, now is a better
time than ever to begin investing
in property. Property, unlike
shares, is a relatively stable
market and has a simplicity that
other investment strategies
simply do not. Australia has a
high rental demand and housing
shortage, which makes property
investment a safe and profitable
strategy for wealth building.
Increased demand leads to
increased competitiveness and
increased profit. It’s certainly
not hard to see why many lean
toward the property sector.
Some business owners have
begun leveraging company
money for their own property
portfolios. It’s a smart move that
carries the message that simply
owning a business or having an
income no longer cuts it when
retirement comes around. More
often than not, owners with
great businesses waste wealth
building potential by failing to
create assets and then are left
with little to show for their years
of hard work.
When done well, investing in
the property market sees small
“Now is a better
time than
ever to begin
investing in
property.”
and in circumstances where
the debt is deductible under tax
law. An example of good debt is
borrowing to buy an investment
property. If you buy well, the
price of the property should
grow by more than inflation and
the rent money from tenants
will accumulate, all whilst
interest and other expenses will
help legally reduce tax. With
the right kind of debt, you can
maximize gains to help achieve
your financial goals sooner. So,
debt can be a productive tool;
it doesn’t always have to be
feared. A great starting place is
a basic education in financial
literacy to remove the fear of
not understanding. The truth
about building wealth is simple
and logical and when the basic
principals of financial literacy
are applied, anyone from any
walk of life is capable of bulding
wealth. The struggle for most
becomes that we must keep in
mind that it is our consistent
actions over a period of time
that determine outcomes and
therefore the quality of our lives.
‘values’ often taking a little time
to grow. With a deposit of as
little as 5 to 10 per cent, one
can purchase an investment
property. Comparing this to
shares, where substantial self
funding is required, the benefits
are immeasurable.
WHAT’S STOPPING US?
Often what prevents people
from beginning their investment
portfolios is a fear of the
unknown and a fear of making
mistakes. Then there’s the
‘d’ word. The term ‘debt’
has generated such negative
connotations that we avoid it like
the plague. However, there is a
distinction between ‘good’ and
‘bad’ debt.
AUTHOR
Marion Mays, Director
THALIA STANLEY GROUP
CONTACT
1300 031 996
WEBSITE
thaliastanley.com.au
Accumulating ‘good debt’ usually
relates to borrowing for assets
that go up in value over time
Women’s Network Magazine
41