It’s never too early to start thinking about your financial needs for retirement and it’s never too late to start planning and saving for it.
Set a realistic budget—starting a regular savings or investment plan requires commitment and may be easier to achieve by first setting a realistic budget.
Regular saving—even small amounts, saved regularly, do make a difference. A regular savings habit adds to your future security and gives you more choices about your future lifestyle.
Saving or investing?—money for short-term expenses or emergencies is best kept in low risk, readily accessible accounts. Any extra money you have could be invested for longer periods to earn you a higher return.
Learn as much as you can about investments by attending investment seminars or reading about investment strategies in newspapers, investment magazines and books.
Look after your investment
Always deal with licensed financial advice and product providers. When selecting a financial planner, get information from more than one planner before investing your money. Invest only when you understand the products they are recommending and you are satisfied that they suit your needs.
Ask questions if you are unsure about any implications of an investment, no matter how simple they may seem. Ask questions to find out how much risk you are taking and make sure you are comfortable with that level of risk. Where an investment product has a prospectus or product disclosure statement, read it carefully before deciding whether to invest.
Some investments may offer taxation or social security and Veterans’ Affairs advantages. Consider these only where they allow you to invest with safety and to feel comfortable with the amount of risk involved. A Centrelink FIS Officer can give you free information about how your investments may affect your payments, and discuss how to maximise your overall retirement income.
If you are retired and have limited funds to invest, make the safety of your investments your first priority. Don’t just chase the highest returns available—higher returns involve higher risks.
Above all, remember that it’s your money, so make your decisions for your own reasons, not anyone else’s. The investments you choose should meet your requirements by providing the right amount of income and/or capital growth without causing you sleepless nights.
Take your time when making investment decisions—don’t be rushed into signing anything.
Never feel pressured into investing in something. Always take your time to think first, gather information and ask questions before you sign anything. The following steps are a guide:
- Say ‘No’ or hold off
If something sounds too good to be true, it usually is. Do not be fooled by scammers who pressure you to act immediately. If the investment is genuine, it will still be available after you’ve had time to think about it.
- Look further
Shop around to see how the offer compares with other options. Always do your homework and give yourself plenty of time to think it over. Seek advice from a range of people, including financial advisers and consumer protection agencies.
- Question
Do not be afraid or embarrassed to ask as many questions as necessary until you are sure you have all the information you need. Inquire about the investment and the proposed benefits you will receive and make sure that the offer is credible.
- Decide
If you follow these steps you will be better prepared to make a well informed decision on how best to invest your money.
If it sounds too good to be true … Indications of possible scams
Many consumers lose money each year to ‘get rich quick’ schemes that promise everything and deliver nothing.
When there is any doubt at all about the investment or purchase, do not be pressured into anything, do not let the emotions override the decision and say no. Even if the offer is genuine, if there is any doubt it is better to say no at first so it provides the opportunity to understand and be comfortable with it before making a decision.
Some tips to help protect against being a victim of a scam
- Ignore and delete emails, letters and chain mail offering lump sum payments or get rich quick offers.
- Take the time to examine the offer carefully. Do not commit to anything until fully satisfied with its validity.
- Ask for identification from people offering an investment or requesting payments or donations.
- Ask for proof that the business or charity is registered and that the person is employed or registered with them.
- Don’t just accept testimonials without proof they are real as they can often be made up or dressed up to look good.
- Ask if there is a cooling off period and how easily the investment can be redeemed.
- Don’t accept offers from unknown sources over the phone. Ask how they got your details and refuse to commit to anything, as verbal agreements can be enforced.
- Ask for details on all costs, fees and payments that are involved in the offer or request.
- Requests by letter or email requesting details and money should be reported to the Australian Securities & Investments Commission (ASIC) and/or the Australian Competition and Consumer Commission (ACCC).
- Investigate the scheme before parting with your money. For instance you could say that you only deal with people you know, and that you need time to discuss the offer with other people.
- Seek professional advice from a qualified financial adviser authorised by ASIC, or legal advice, or discuss the offer with family or friends. Make it clear that you only take advice from qualified financial advisers that you know personally.
- Check that the source of the offer is genuine, especially if the offer is made by email. Normally it would be wise to disregard and delete all emails promoting get rich quick financial schemes, chain letters or requests for cash to be sent through the mail.
- Ask questions about their company, including their Australian securities dealer’s licence number, their ABN or their Australian Registered Body Number (ARBN) if they are a foreign caller. If they provide you with these details be sure to verify them with ASIC.
- In case you suspect a scam, do yourself and literally thousands of people a favour, and report the matter to the ACCC.
More information about investment situations that you should be aware of as a careful investor can be found at the Australian Securities & Investment Commission's website MoneySmart.