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Investing in Shares Retirement Planning

Investing in Adversity – is there an upside to the downturn?

As little as $1000 could change your life!

Have you been wanting to save and accumulate wealth for a long time, but just haven’t been able to afford it in the past 5-10 years?

Have you been kicking your self that you didn’t enter the market in September 2001, or soon after, when the market was significantly down?

Have you been thinking about all the gains you have missed out on since that time by not having entered the market then?

Are you going to miss the boat again, by waiting to see what the market will do when history has shown that although the market may stay volatile for quite some time, it will go up again?

NOW IS THE TIME TO ACT IF YOU ANSWERED ‘YES’ TO ONE OR MORE OF THE ABOVE QUESTIONS.

NOW IS THE TIME TO CALL ME AND MAKE THE BEST INVESTMENT YOU ARE LIKELY TO MAKE THIS YEAR – SEEING ME, YOUR FINANCIAL ADVISER!  And not because I am going to whip out my crystal ball and tell you where the markets are headed.  (If I knew that, Rosanna and I would be sitting on a balcony in Tuscany enjoying the view, instead of sitting in our offices in front of our computers.)

THE REAL VALUE OF SEEING ME is so that I can lay out a plan to safeguard your future, help you accumulate wealth and help you plan a comfortable retirement.

DON’T LET THIS OPPORTUNITY SLIP BY – CALL ME NOW TO SEE HOW WITH $1000 YOU CAN CHANGE YOUR LIFE.  RING 9317 7300 FOR AN APPOINTMENT.  OR YOU CAN DO NOTHING AND WATCH THAT BOAT SAIL BY – AGAIN.

As we welcome in the New Year, the last few months have seen many of us watching the rollercoaster ride that is the stockmarket.  Just as things seem to be improving, down it goes again.  The full impact of this and other world economic issues is yet to be seen.

However, now is a good time to review your finances and consider the very “real” cost-effective opportunities of DOLLAR COST AVERAGING and a LONG TERM SAVINGS PLAN to accumulate wealth and plan for a comfortable retirement.

DOLLAR COST AVERAGING
Dollar cost averaging is a technique that consists of regularly placing a fixed sum of money into the same investment. By doing this, you will always be purchasing units at an average cost which is lower than the average unit price over the entire period.

As an example, you put $2,000 a year for five years into a market linked investment. During that period the market falls by 80% before recovering to its original starting point. At the end of the five years your position would be: 

 
Year 1
Year 2
Year 3
Year 4
Year 5
Investment
$2,000
$2,000
$2,000
$2,000
$2,000
Unit price paid
$10
$4
$2
$6
$10
Units bought
200
500
1,000
333
200


As you can see, your total outlay was $10,000. You now own 2,233 units at $10 each with a total value of $22,330.

Accordingly, your investment has appreciated by 122% at a time when the market has been in a slump.

The average cost of your 2,233 units was $4.40 a unit. ($2,233 x $4.40 = $10,000.) However, the real average unit price over the same period was $6.40.

HOW DOES DOLLAR-COST AVERAGING WORK?
It works because if you keep up your regular investment you get a larger number of units as the price falls. Accordingly, you’re able to acquire your biggest parcel at the bottom of the market, and make your first profit on the largest number of units when the market eventually rises.

Remember, very few people know the right time to enter and leave a market. Certainly, there are plenty of predictions made, and many boast about the time they picked their entry and exit perfectly. However, you seldom hear about the other times when they get it wrong.

The advantages of the dollar-cost averaging process is that it’s simple, it works, and it enables investors to do well in a rising or falling market.

However, this technique will only work if prices eventually recover after a downturn. Accordingly, I recommend to my clients that they only use dollar-cost averaging for top quality investments. History shows that the sharemarket always recovers to a position greater that its previous best.

LONG TERM SAVINGS PLAN
A regular savings plan is key to long term wealth creation.  To be a successful investor in the market, you don’t necessarily need a large amount of money.  You can start with as little as $1000.  What is vital is a commitment to a regular savings plan.

A regular savings plan is a disciplined method of investing and an excellent way to benefit from dollar cost averaging.  With a regular savings plan, a set amount of money is automatically debited from your bank account on a regular basis.  Your monthly contribution could be as little as $100 per month.

SO, WHAT ARE YOU GOING TO DO?  LET AS LITTLE AS $1000 CHANGE YOUR LIFE?  OR ARE YOU GOING TO WATCH THAT BOAT SAIL BY – AGAIN.

Regards Paul

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Establised 1989. Over 25 years. Advice you can rely on.

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For more information about the services we provide, or to find out if you are eligible for a free no-obligation consultation, call us now on 9317 7300.

The information provided on this website, including the material and contents provided in the website publications, are informative in nature only and you should not act specifically on the basis of this information alone. It should not be used as a substitute for legal, business, accounting, tax, financial planning or other professional advice. If expert assistance is required, professional advice should be obtained.

Paul Baggetta is the Founder & Principal of Baggetta & Co. Paul Baggetta has been a Taxation Accountant since 1981, a Financial Planner since 1998, and in 1993 qualified as a Real Estate Licensee, holding a Triennial Certificate (currently not trading) and operated his own Real Estate business for property investment clients for over 5 years as a second business.

Financial planning services are provided by Paul Baggetta as an Authorised Representative (No. 261469) of Capstone Financial Planning Pty Ltd. ABN 24 093 733 969. Australian Financial Services License No. 223135.

 

Taxation & Accounting services are provided by Paul Baggetta as a Registered Tax Agent (No.61487008) and is a Member of SMSF Association, FIPA & NTAA.