What is the best way to achieve financial success?
Money and finance have been around long enough now that surely someone has come up with the best way to achieve financial success.
Before superannuation, it seemed the solution was to maybe build an investment property portfolio, or maybe a share portfolio. For example, with property you might have negatively geared for the first few years, and then the rental income started to take care of the interest and off you went. If you held these investments for a long time you probably would have had some financial success.
Then along came superannuation, which provides tax incentives that are difficult to obtain with other forms of direct investing. Tax breaks or not, there are many superannuation skeptics. “It is controlled by the government – they can change the rules whenever they want”. Sure, the government can do this, just as they can change personal tax rates whenever they want, and change the way capital gains tax is calculated, too.
However, this is not a pitch for superannuation.
So what is the best way to achieve financial success?
This will be different to all of us. Some people will like to have a regular savings plan that builds wealth over time with their savings. Some people might take on a large level of debt to fund a property or share portfolio. Some people may see their business as their ‘retirement nest egg’. And then there are some who are known as ‘high risk takers’, who are prepared to risk more than most people to achieve their idea of financial success.
However, the real high risk takers are those who try to achieve financial success using some system or process that doesn’t suit them.
Such an approach leaves you vulnerable to sustainability risk.
Sustainability risk relates to the reduced sustainability which occurs when you attempt to follow a strategy or plan that simply doesn’t suit your preferences. So if you find a regular savings plan boring, you probably won’t stick with it for too long. If you find a large amount of investment debt as risky and scary, then it won’t take long for you to abandon the strategy.
So what is the best way to achieve financial success?
The best way is the way that suits your preferences. Your preferences are contained and explained in your Money Personality.