Building Wealth Efficiently

Financial Autonomy - Blog
Building Wealth Efficiently

You’re busy with your career and personal life. You don’t need your wealth creation plan to suck up hours of each week. So how can you best put your earnings capacity to work to secure choices for you down the road, without the plan adding to your already full schedule? This week I’m sharing 7 ideas to help you build wealth efficiently.

I wonder if there is enough focus on building wealth efficiently. Whether it’s looking to cut costs at every turn, or convoluted strategies that require you to be up at 3am to watch FX markets roll. Some property strategies assume you have hours to spare maintaining properties. If you are someone with an excess of time on your hands, today’s post isn’t for you. But if you’re busy, busy in your career, and busy in your life, then it’s not enough to figure out how to build wealth, you need to figure out how to do it in a way to doesn’t suck hours and hours of your time.

Here’s my 7 ideas for how you can avoid that fate. How you can build wealth efficiently.

Savings Capacity

Your savings capacity is a foundational element in you building wealth. As alluded to in the introduction, most of our clients are enjoying career success and earning good levels of income. Our work is in helping them convert that income into wealth which, then translates into choices later in life. Some people get hung up nailing down exactly how much they can afford to invest on a regular monthly basis towards their wealth creation plan. Instead of letting this be a barrier, pick a figure that feels like it has some basis in reality, then simply adjust once you get going.

Automation is your friend

Automate your investments. You’re doing this with super now. Automation is great because your wealth accumulates without your conscious thought. Automation creates discipline. It also achieves dollar cost averaging – your purchases are spread over time, averaging out your purchase price. ON top of all these benefits, it’s super efficient, which is the theme of this episode. Likely your plan will have some combination of debt repayments, salary sacrifice to super, and non-super investments. All of these can be automated.

Avoid Admin Headaches

You’re time poor. Spending your time doing investment admin is not smart – dealing with share registries, W8 BEN forms, dividend statements and corporate action. What a headache.

If you want to build wealth efficiently, use an administrative platform for your non-super investments. Your time is worth more than being a bookkeeper. Admin providers will take care of the share registries and produce tax summaries for you. Plus, no dividend statements for you to file. A massive time saver for little cost.

Build your team

Have a financial planner, accountant, and perhaps solicitor that you trust and can call on. When an issue crops up, rather than you spending hours trying to find the answer on Google, just reach out to your team of professionals. I’m pretty sure Usain Bolt wasn’t preparing his tax return and rolling over a maturing term deposit when he was training for the Olympics. Focus on what you’re good at, and engage experts to do the rest.

Leave it alone

Don’t fiddle. Investment markets go up and down, that’s just what they do. You wasting hours trying to time the market is not only wasted hours on your part, this fiddling is almost guaranteed to detract from performance as well. Check out Why is the Best Strategy Also the Toughest to Pull Off?

Don’t stock pick

Picking individual stocks can be a fun hobby, just like following the horses at Flemington on the weekend. But if you’re looking for wealth creation efficiency, just go with funds. ETF’s or managed funds as the need requires, it makes little difference. But broadly diversified funds are a far more efficient way to gain market exposure than you building out a portfolio from scratch.

What’s your goal?

Have clarity on your goals. As everyone listening who has been through our Financial Autonomy program would know, we spend a lot of time in our first meeting discussing and prioritising your goals. If your goals are clear, then you can develop and implement strategies to make progress towards the achievement of those goals. But if your goals are ill defined, you can end up starting one plan, then needing to change course months down the track, then change again further along the journey. Not only is this almost certainly costly, it is most definitely the opposite of wealth creation efficiency. Determine your goals, then create your strategy, then let it do its thing.



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