Take Control of Your Financial Future: Three Key Strategies for Smart Wealth Building
Building wealth is about making smart decisions and staying consistent. Whether you're planning for a comfortable retirement, aiming to eliminate debt, or looking to grow your investments without stress, these three strategies will help you make progress confidently.
1. Automate Your Investments
One of the simplest ways to grow your wealth is to automate your investment contributions. By setting up recurring payments, you ensure your money works for you consistently, without requiring constant attention. It also puts you in a position where you are spending what’s left after investing, instead of investing what’s left after spending. This method will allow you to stay on track with your goals and prioritise wealth building.
Why automate your investments?
Consistency Leads to Growth - Regular contributions, regardless of market conditions, help smooth out volatility over time.
Less Decision Fatigue - Automation removes the guesswork, ensuring you stick to your plan even during busy or uncertain periods.
Harnessing Compound Growth - Small, consistent investments grow significantly over time, thanks to compounding.
Dollar Cost Averaging - By investing a fixed amount regularly, you buy more units when prices are low and fewer units when prices are high, helping to smooth out market fluctuations and reduce risk over the long term. For more information on the power of dollar cost averaging see our blog here.
How to Automate Your Investments
KiwiSaver Contributions: Ensure at an absolute minimum you are contributing 3% of your income to get the full employer match, and consider increasing this to 6% 8% or 10% if you can. The impact that this will have on your retirement balance can make a significant difference.
Investment Funds: Most investing platforms allow you to set up regular payments into diversified funds tailored to your goals. If you haven’t already spoken to an advisor to see what funds would be suitable for you – reach out to us today for a bespoke retirement strategy plan with investment recommendations.
Contribution Comparison
Contribution Comparison
2. Maximise Your KiwiSaver for Long-Term Success
KiwiSaver is one of New Zealand’s most effective tools for building long-term wealth. Whether you're thinking about retirement or simply want to grow your savings, optimising your KiwiSaver contributions is a smart move.
How to Get the Most from KiwiSaver
Meet the Government Contribution Threshold: Contribute at least $1,042.86 annually to receive the full $521.43 from the Government. This is effectively a 50% return on your investment!
Increase Your Contributions: Bump your contributions to 6%, 8% or even 10%. These small increases now can lead to significant gains later. Unless you really rely on that extra cash each payday, you’re better off sending it to grow in your investment fund! See the graph above that illustrates the significance of contribution increases over a long time frame.
Choose the Right Fund:
High-Growth Funds: Great for long-term growth but carry higher risk so best for investors who won’t need to access these funds for over 10 years.
Balanced Funds: Offer a mix of growth and stability, ideal if you’re more cautious or closer to retirement.
A combination of funds: Reach out to us if you want advice on how to structure your KiwiSaver investment, you can split your KiwiSaver up so it works with your retirement goals.
What can you do?
Log in to your KiwiSaver provider’s portal and review your fund type, contribution rate, and balance. Reach out to a financial advisor for advice - 82.3% of advised people reported better KiwiSaver outcomes, highlighting the importance of expert guidance. We are here to help and want to see your KiwiSaver succeed - complete our KiwiSaver quiz for a free bespoke KiwiSaver Strategy recommendation.
3. Pay Off Debts and Your Mortgage Faster
Debt repayment is a cornerstone of wealth building. Eliminating high-interest debt and reducing your mortgage can free up cash flow for other financial goals.
Tackle High-Interest Debt First or Small debts?
Credit cards and personal loans typically have the highest interest rates. Focus on paying these off as quickly as possible using one of the following methods:
Avalanche Method: Prioritise debts with the highest interest rates.
Snowball Method: Pay off smaller debts first to build momentum and motivation.
Already consumer debt free? Amazing! How’s your mortgage?
Mortgage Repayment Strategies
Paying off your mortgage before retirement can significantly reduce financial stress, free up your cash flow, and provide peace of mind during your retirement years. Without the burden of mortgage repayments, you’ll have more flexibility to allocate funds toward your lifestyle, travel, or additional investments. Additionally, entering retirement mortgage-free lowers your fixed expenses, making it easier to maintain your standard of living on a reduced income.
Increase Your Repayments: Even small additional payments can reduce your loan term by years and save thousands in interest. Most banks will have a calculator or online tool that can show you how long your loan term will be if you increase your repayments.
Refix Your Rate: Review your mortgage regularly and negotiate with your lender for better rates when possible - you could be better off paying a break fee to refix to a lower rate, than to continue as you are until your fixed term ends.
Switch to Fortnightly Payments: This effectively results in 13 monthly payments each year, helping you pay off your loan faster.
Use a Mortgage Offset Account: Every dollar in an offset account reduces the balance of your loan that accrues interest, saving you money while keeping funds accessible.
What Can you do?
Talk to your lender about setting up higher repayments or refinancing for better terms. You can use a mortgage calculator to model the impact of extra payments and see how much you can save.
Make Wealth Building Effortless
The most effective wealth-building strategies are simple but require consistency and focus. Automate what you can, maximise the tools available to you like KiwiSaver, and eliminate debt to free up your finances.
Take action today - whether setting up automatic payments, reviewing your KiwiSaver fund, or making a goal to pay off your mortgage. It will put you on a path to financial freedom and peace of mind.
If you are looking for expert advice on building wealth and personalised recommendations please complete one of our quizzes and book in a time to speak to Adam about your goals. We’d love to help you feel confident about your retirement or investment journey.
Compound Wealth are based in Mount Maunganui, Tauranga and offer KiwiSaver, Investment & Retirement Financial Advice to clients all over New Zealand.