Kick-start your financial fitness. Work out your money and get your finances into shape

Transcription

1 Kick-start your financial fitness Work out your money and get your finances into shape

2 CONTENTS 4 Top tips for financial fitness 6 Make the most of your money muscle realistic budgeting 8 Regular financial exercise for long-term gain creating a savings plan 9 Debt-busting exercises reducing and controlling debt 10 The healthy credit card workout sensible credit management 12 Increase your financial strength building financial assets through investing 16 Financially fit at any age retirement planning 18 Health insurance for your finances protecting your assets 19 Mastering the tax-time treadmill preparing for tax time 20 The financial fitness information directory 22 Financial fitness talk explained glossary of terms Back cover Your budget planner and spending record sheet Important notice Australia and New Zealand Banking Group Limited ABN This booklet provides general information and is intended as a guide only. The information does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you. It is not intended to be a substitute for professional advice and should not be relied upon as such.

3 Financial fitness an essential part of your personal well-being Keeping financially fit is just as important for your well-being as physical fitness. Just about everyone, at one time or another, has wished they had their finances a little more under control. Like getting physically fit, the hardest part about getting your finances into shape can often be simply making up your mind to do something about it. This booklet contains practical hints and information to help you understand and manage your finances. And the good news is, just by picking up this brochure you ve already made a start! Terms appearing in bold text throughout this guide are explained in more detail on page 22.

4 Top tips for financial fitness Your financial future is in your hands. The following tips will help you to kick-start your financial fitness 1. You are responsible for your money know what you earn, know what you spend, know where you stand and know where you re heading. 2. Keep a budget, review it regularly and include a plan for regular savings. 3. Keep records of all your financial transactions together in one place from bank statements to super fund statements. Check your statements carefully and talk to your financial institution if there are any inconsistencies, or if there is anything you don t understand. 4. Don t spend more than you earn and only borrow what you can realistically afford to repay. 8. Be aware of what your financial products are costing you ask questions if you don t understand the fine print and shop around to find the products that best suit your needs. Don t sign up for anything you don t fully understand. 9. Seek professional and qualified financial advice when it counts (e.g. buying a house, planning for retirement, insurance, investing and tax issues) and get a second opinion if you feel unsure. 10. Be cautious of investments offering a high return from little or no risk. If it sounds too good to be true, it probably is! 11. Take the time to teach yourself more about finance (see page 21 for more details) and don t be embarrassed to talk about money with people you can trust. 5. Map your financial future, including how you plan to fund your retirement. 6. Protect your assets with adequate insurance. 7. Understand the basics of investments, including superannuation. Remember that high returns generally equal high risk and only take on a level of risk that you feel comfortable with. Do an annual health check on your investments. 4

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6 Make the most of your money muscle Realistic budgeting Do you ever find yourself down to your last few dollars two days before your next pay? You can get back in control of your money and kick-start your financial fitness program by creating a budget to suit your needs. Here are some ideas to get you started: 1. Take a look at what you earn and what you spend write it all down during the course of one pay period. Where does your money really go? 2. Can you cut your spending and increase the amount you set aside for savings or to repay debts? There are ways to cut your spending without having to live frugally. For example, only go shopping when you have the money to do so, shop around for the best price for major items such as whitegoods and consider buying secondhand rather than new goods. 4. Now create your budget. Start with what you get paid. How much do you need to account for your essential living and household expenses? Decide how much you want to set aside as savings. How much do you want to reserve to pay your debts? Do you want to invest some money? Can you allow yourself a small amount of play money? Write it all down. 5. Set aside a modest emergency fund to pay for any unforeseen expenses such as a surprise car repair bill or your dog s unexpected trip to the vet. 6. Once you ve worked out your budget, give it a reality check. A realistic budget is one you can follow without it being a constant struggle. 3. Set yourself at least one financial goal. Do you want to save up for a holiday, buy a house or try to pay off your credit card debt once and for all? Having clear goals will help you decide what s important and give you an incentive to keep your finances under control. 6

7 Checklist for a realistic budget Set your budget period to match your pay period, whether it s weekly, fortnightly or monthly. This will make it easier to manage your pay. Pay yourself first your savings and retirement plans should be one of your main budgeting priorities. They are the keys to achieving many of your short-term goals and long-term financial security. Organise your pay so that savings and debt repayments are automatically deducted. Avoid impulse buying. For example, take only enough money for food on your lunch break and leave the credit card or your ATM card back at the office. Better still, take your lunch to work with you! Review your budget every few months (or more), to make sure you re sticking to the plan. Maybe you can put a little more into your savings, or perhaps you need to allow a few extra dollars for household bills. Keep your savings out of reach by transferring them into a separate savings account. Consider an account that doesn t have ATM or electronic access. Take action: Create your own budget using the budget planner and spending record sheet at the back of this booklet. 7

8 Regular financial exercise for long-term gain Creating a savings plan Many people find that after they pay the bills, cover the basics and make the odd day-to-day purchase, there isn t much left for anything else. For some, saving up for major purchases such as a holiday, a car or a house, seems near impossible. If this sounds like you, it s time to start saving and make your financial fitness program pay off! A healthy savings plan can be the key to achieving your financial goals and making your life easier and more enjoyable. Successful saving checklist Start today, no matter how small your regular savings contribution might be. Thanks to compound interest, a smaller amount of money saved sooner can earn more over the long term than a larger amount of money saved later. For example, if you saved $2 every day from the age of 18 until you turned 60, you will have accumulated almost $105,000 (assuming annual earnings of 5%). Pace yourself. Make sure your savings goals are realistic. If you set the bar too high it s easy to become disheartened and stray from your savings plan. Be disciplined and make savings a part of your regular budget. Keep your savings in a separate account so you won t be tempted to dip in. But remember there are lots of different accounts to choose from. Shop around, ask questions and aim to select an account that meets your needs and provides low or no fees. Watch your savings grow. Seeing the results of your efforts will make it easier to stay on track. Take action: Open a savings account if you don t already have one. Organisations such as the Australian Consumers Association and InfoChoice have websites to help you compare finance products, including savings accounts. See the directory on page 20 for more information. 8

9 Debt-busting exercises Reducing and controlling debt Debt can be a necessary and beneficial part of life. Most of us take on debt for a set period of time in order to purchase life s big ticket items such as a car or home. But unmanageable debt can put a serious dent in your emotional well-being and, in some cases, cause severe financial and personal distress. The debt-busting checklist If your debts never seem to go away, it s time to take a realistic look at your situation and the only way to tackle debt is head-on. Take action: Ensure you make at least the minimum payment due on your loans and put any extra payments towards those loans charging the highest rate of interest. Assess your current debt situation and work out a plan of attack. Get help from your bank, a financial planner or a financial counsellor if you are not sure where to start. Set some realistic goals for paying off your debts, even if it s just one at a time over an extended period at least you ll have something to work towards. Make debts a priority in your budget, after your essential living expenses. Think about consolidating your debts to make them more manageable. For example, if you have more than one loan from the same bank, you may be able to roll some or all of these loans into a single loan and potentially reduce the interest and administration fees that you pay. If you do choose to consolidate your debts, shop around for an option that will best meet your needs and aim for a low overall interest rate and minimal fees. As with any financial product, make sure you read the fine print. Beware of products that look like they will be a quick fix in the short term but actually lock you in to excessively high interest rates and ongoing fees longer term. If you can t consolidate, start by paying off smaller debts and those with high interest rates. You ll feel a lot better when you cross off that first debt and you can then continue to set aside that repayment amount to go towards your larger debts. Never ignore a debt that you can no longer repay. Talk to your financial institution sooner rather than later they may be able to vary your repayment plan to help make the situation more manageable. Alternatively, talk to a financial counsellor about other strategies that might help. 9

10 The healthy credit card workout Sensible credit management There s no doubt that credit can be convenient, but never forget that what goes on your credit card is another debt that you will eventually have to pay, often with interest on purchases and cash transactions added. Take action: For more information on how to use and manage credit, visit A Guide to Credit at The key to making credit work for you is to use it wisely and know your financial limits. Checklist to successfully managing credit If you don t think you can manage repayments on a credit card, don t get one. Choose a credit card that is right for you. Shop around, ask questions and read the fine print. Interest rates, annual fees, interest-free periods and features such as reward points vary from card to card. Only charge items to your card that you know you can afford to pay off within a realistic time frame and be aware that most credit cards charge additional fees for late payments. Limit the number of credit cards you have to one or two. Fewer cards mean fewer annual fees and fewer interest rates to keep track of. Consider carefully any offers to increase your credit card limit. Do you need more credit? Will you be able to manage it? Think about decreasing the limit, if you have more credit than you need or can afford. If you make a transaction that takes you over your credit limit, you must pay the excess amount immediately. If you don t, your bank may charge an overlimit fee or close your card. Avoid cash advances and cash equivalent transactions (e.g. using your credit card to get cash from a branch or ATM, or to pay another credit card account). They are a costly way of getting access to cash, incurring interest from the date you make the transaction until the date the transaction is paid off in full. Try and pay off your credit card every month. If it s not realistic to pay off your credit card each month, pay more than the minimum repayment. The more you pay, the faster you can reduce your credit card debt. Talk to your bank or financial institution if you get into trouble paying off your credit card and see whether you can organise a payment schedule that works for you. 10

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12 Increase your financial strength Building financial assets through investing Think you have to be rich to invest? Not necessarily; some of the most successful investors start small and watch their money grow over time. Investing can be a great way to strengthen your finances in the mid to long term, so you can enjoy a financially fit and comfortable future. It s easy to get started, but it s also important to understand the basics of investing first. This will help you to make wise choices and avoid getting into financial difficulty. Know how much risk you can take on All investments involve some level of risk, though some more than others. Generally speaking, if the expected return from an investment is above-average, then the risk associated with the investment is usually above-average. The lower the likely returns, the lower the level of risk. This is called the risk/return trade-off. There are ways of managing your investments to reduce the amount of risk you are exposed to, including: diversification, that is, spreading your money around and investing in different types of investments or with different fund managers taking a long-term view and investing your money for longer periods of time to reduce the impact of short-term ups and downs (volatility) on your investments. What types of investments are there? There are four main types of investments (called asset classes ): shares direct investments in companies listed on the Australian Stock Exchange or on international share markets, or indirect investments in unit trusts which hold shares in a selection of companies property a direct investment in property assets (such as houses, offices or factories), or an indirect investment in a property trust, which holds assets in a selection of properties. Property trusts are usually listed on a stock exchange fixed interest (bonds) investment in fixed interest securities such as bonds issued by companies or governments cash investments in short-term, interestbearing products such as bank bills or commercial bills, or in term deposits. These can be accessed by investing directly in the assets themselves (e.g. buying some shares, or buying a property), or by investing indirectly through products such as managed funds. When investing in a managed fund, your money is pooled together with that of other investors and is then invested by a professional fund manager on your behalf. Depending on the type of managed fund, the pool of money can be invested in one or more of the four main asset classes. 12

13 Different asset classes and their characteristics Cash Fixed interest Property Shares International investments Volatility Low-med Medium Med-high High High Returns Low-med Medium Med-high High High Time frame (years) Possible tax benefits No No Yes Yes Yes Examples of investments in these asset classes Bank accounts, bank bills, cash funds Govt bonds, debentures, bond funds Houses, offices, factories, property funds Shares, share funds, listed investment funds Share funds, fixed interest funds Courtesy of the Investment and Financial Services Association Please note: the opinions and recommendations of your financial planner or financial institution may differ from those shown in the chart above. Which investments are right for me? So you want to invest, but what should you invest in? Should you look at investments that are short term or long term? In order to determine the types of investments that best suit your needs, you ll need to identify a few factors that are unique to you and your financial situation, such as: what you want to achieve from your investments what level of risk you are comfortable with (and can afford to take). These are some of the factors that help to determine which sorts of investments would be right for you. A financial planner can assess your circumstances and help you choose an investment mix that best suits your financial needs. your time frame, or how long you want to invest for 13

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15 Checklist to building financial assets through investing If you re new to investing, educate yourself. Organisations such as the Australian Stock Exchange and the National Information Centre on Retirement Investments provide information and education to assist people make better informed decisions about investing. Talk to a qualified financial planner about your financial goals and which types of investment would be best for you. Make sure you understand the tax effects of your investments and talk to a registered tax agent (or a financial planner) if you re unsure. Understand how much risk you are comfortable with and how long you want to invest and select your investments accordingly. Start sooner rather than later and take advantage of the power of compound interest. Invest small amounts regularly to boost your investment over time and reach your goals sooner. Make diversification part of your investment plan and ensure investments meet your time frames. Review your investments regularly and when your circumstances change. Talk to a financial planner to make sure your investment plan still meets your needs. Remember that all investments involve some level of risk. Be wary of get-richquick schemes. If an investment is offering high returns from little or no risk, it s probably too good to be true. Don t be pressured into making an investment that you are not comfortable with and always read the relevant information about any investment (such as offer documents, product disclosure statements and prospectuses) in full, before you make a decision. Take action: Choosing a financial planner Before consulting a financial planner, make sure you take the time to check the planner s credentials. Financial planners operating in Australia are required by law to be properly licensed. At the end of this document, we have included contact details for a number of organisations that can help you determine if a planner is appropriately qualified to provide you with advice. 15

16 Financially fit at any age Retirement planning Did you know that the aged pension and your employer s compulsory contribution to your superannuation probably won t be enough for you to retire at the same living standard that you currently have? If you re looking forward to 20 years or more of retirement, how enjoyable will it be if your money supply retires at the same time you do? You simply can t put off planning for your retirement. How much might you need? Many financial professionals estimate that to have the same living standard in retirement that you currently have, your annual retirement income will need to be about 60% of your current income. The following table gives a basic estimate only of what you might need to set aside in order to fund a retirement of 20 years. Current annual income $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 $100,000 $110,000 $120,000 60% of current income $18,000 $24,000 $30,000 $36,000 $42,000 $48,000 $54,000 $60,000 $66,000 $72,000 Retirement savings required to enjoy 20 years of retirement at 60% of your current income $360,000 $480,000 $600,000 $720,000 $840,000 $960,000 $1,080,000 $1,200,000 $1,320,000 $1,440,000 Note: this table is a simple example only. It does not account for the effects of taxation, inflation, or investment earnings, nor eligibility for social security benefits. 16

17 Checklist for a financially fit retirement Seek the assistance of a qualified financial planner to help you shop around for the super arrangement that will best suit your requirements and determine how much you should be saving now. Your super investment might be the most important investment you ever make. Work out how much money you will need to have a comfortable retirement with the financial flexibility to allow you to live life to the full budgeting is as important during retirement as at any other time in your life. Remember that super can be a tax-effective vehicle, as it is taxed at a lower rate than other forms of investment. Make sure you read the fine print and don t be afraid to ask questions about your super fund if you are unsure. Try to consolidate some or all of your super if you have collected a number of super funds from different employers over the years. Not only can it make your super investments easier to keep track of, it can also reduce the amount you pay in fees. If you ve had a number of employers over the years and you think you might have lost track of one of your funds track down that unclaimed super and roll it into an existing fund. See the directory on page 20 for a list of services to help you find lost super. Make sure you re aware of the fees you are paying on your super fund, as there may be other, cheaper funds that suit your needs just as well. Take action: Think about making extra contributions to your superannuation. The earlier in life you start making frequent, additional contributions to your super, the greater the impact the power of compounding will have on your retirement savings. 17

18 Health insurance for your finances Protecting your assets The most important assets you have are your health and your income. Just as you insure your house and your car, you also need to protect your health and ability to earn money, for yourself and your family. You might think you could live without your income for a few weeks, or a few months, but have you considered how much you might stand to lose over the long term if your ability to earn that income is unexpectedly taken away? Ask yourself this: how long would your money last if you were suddenly unable to work even if it was just three months without an income? And how would your family or partner cope financially if you became disabled, or if you died? While income protection usually won t replace 100% of your salary (most policies provide cover for up to 75% of your salary), insuring your earning power can still mean financial security if events take an unforeseen turn. And, income protection insurance premiums may be tax-deductible. The asset protection checklist Keep track of any existing insurance policies and check the insurance cover of your super fund. Some super funds automatically provide income protection insurance, or death and disability insurance. Consider the different types of insurance available from insurance for your car, your house and its contents, to health insurance, income protection insurance and life insurance. Talk to a qualified professional who can provide advice about your (and your family s) insurance requirements. With any insurance policy (whether it s one you ve had for years or something you re thinking about taking out), read the fine print and make sure you understand exactly what you are or are not covered for and exactly what it s costing you. Shop around for a policy that suits your needs and provides value for money. Talk to a solicitor about drawing up a will if you don t have one already, or purchase a do-it-yourself Will Kit. Having a valid will is the only way to guarantee that your assets will be allocated according to your wishes. If you ve already got a will, make sure it s up to date circumstances can change, as can your preferences for how you would like to have your assets distributed upon your death. 18

19 Mastering the tax-time treadmill Preparing for tax time Tax time usually catches most people unprepared, so why not be ready this year? These basic tips will help you get ready for June 30. A little bit of organisation will go a long way towards maximising your potential tax refund. Keep records of your earnings, including: income earned from all employers; your employer(s) should provide you with a payment summary at the end of each financial year bank interest; as shown on your bank statements for the year income from investments; such as capital gain on shares, or income in the form of interest or dividends, your broker or investment manager should provide you with statements of these transactions details of Government benefits and pensions received superannuation fund payments (your super fund should provide you with a statement) details of assets you ve sold, for example a house, a car or shares. Keep receipts for any potential deductions, including: work-related expenses for which you have not been reimbursed; e.g. equipment and tools, travel costs, subscriptions to trade journals, study expenses, etc gifts or donations to registered charities; these must be of $2 or more in order to be deductible and the charity must be registered health-related expenses; if you incurred expenses such as medical bills, or cost of medications etc which, after any rebates, may exceed the current Government threshold, you may be eligible for a tax offset depreciation; some items used for work purposes may be depreciable, such as computer equipment, motor vehicles, and tools of the trade. You can complete your tax return yourself or seek professional tax advice. A registered tax agent can prepare your return, explain how the tax rules apply to you and ensure any tax you owe or any refund you are due is correct by taking into account all legally available deductions and rebates, etc. Remember to keep all the records you use in preparing your personal tax return for five years from the date you lodge your tax return. Check the Australian Taxation Office website for details at 19

20 The financial fitness information directory Banking and Financial Services Ombudsman A dispute resolution service dealing with disputes that individuals and small businesses have with their financial service providers Australian Securities and Investments Commission (ASIC) Visit ASIC s consumer website, FIDO, for financial tips, safety checks on financial products and services and warnings about scams. Get ASIC s free brochures on superannuation, Super decisions, on financial planning, Don t kiss your money goodbye on money management, Your Money and You can complain Australian Stock Exchange (ASX) The ASX provides comprehensive market data and information. Visit the website for shareholder information, investor education and free on-line classes Australian Taxation Office For free information and assistance with tax matters, call: Personal Tax Infoline Business Infoline Superannuation Infoline Or, visit the Tax Office website: Centrelink Centrelink s Financial Information Service is an education and information seminar program available to everyone. It assists people to make more informed financial decisions for their current and future needs and helps people understand the consequences of their financial decisions including the possible short, medium and long-term effects of those decisions. Contact Centrelink to book a place at a seminar near you Consumer Affairs The Ministerial Council on Consumer Affairs (MCCA) consists of all Commonwealth, State, Territory and New Zealand Ministers responsible for fair trading, consumer protection laws and credit laws. Visit the MCCA s website for consumer news and information, including contacts for consumer affairs and fair trading ministers and agencies around Australia. These agencies can provide you with information and assistance in relation to credit and debt matters. Or, for detailed information on the Uniform Consumer Credit Code and your rights as a consumer, visit: Australian Consumers Association (ACA) The ACA publishes independent consumer news and information on personal finance matters, including banking, insurance, investing and borrowing. It also has a website to help you compare transaction accounts from different financial institutions and switch bank accounts. (02) and InfoChoice InfoChoice provides unbiased information on a range of financial products and services, including tools to help consumers compare products, such as transaction accounts, credit cards and home loans. (02) A Guide to Credit An online guide by ANZ, helping you understand how to manage credit and providing tips on maintaining a good credit history. Or visit any ANZ branch and pick up a copy of the brochure How credit cards work. 20

21 Educate yourself Read the money section in your daily newspaper and also the personal finance and investment magazines at your local newsagent. Tune in to finance reports on the radio and television news and to any personal finance programs. Ask your financial institution for information about managing finances and investments. Visit your local library for free access to books, magazines and websites and ask your local council about personal finance classes in your area. Contact an adult education centre near you (e.g. a TAFE institute or University of the Third Age) and ask about short courses in personal finance, budgeting, investing, etc. Financial Planning Association of Australia (FPA) The FPA can help you find a planner in your area and provide information about your rights FindMySuper Pty Ltd If you have lost track of your super money from a past employer, FindMySuper can help you find it. (02) Superseeker The Tax Office s online service, Superseeker, can help you search for lost super. Financial Counselling Services The following services provide financial counselling for people facing financial hardship or can refer you to an appropriate service in your State or Territory. These services are free and confidential: Victoria Financial and Consumer Rights Council (03) New South Wales Credit Helpline ACT Care Financial Counselling Service (02) South Australia Uniting Wesley Mission Adelaide (08) Western Australia Financial Counsellors Resource Project (08) Tasmania Anglicare Financial Counselling Service Queensland Financial Counselling Association of Queensland (07) Northern Territory Anglicare Northern Territory (08) Lifeline Lifeline delivers a range of training and face-toface services covering a variety of issues including financial counselling National Information Centre on Retirement Investments For free information about retirement investments and the financial planning process *Please note that some of the services listed in this directory may incur fees. If you wish to make use of a particular service, check with the relevant organisation if any fees or charges apply. 21

22 Financial fitness talk explained glossary of terms Budget Compound interest Credit Debt Deductions (tax) Depreciation Diversification Financial counsellor A budget is simply a plan that you can draw up for yourself, stating what your income is and how that income will be used. Interest paid on your invested capital, as well as on the interest already earned on that capital. For example, an investment of $1000 earns compound interest at 5% per annum for three years. In the first year the $1000 will earn $50 in interest, bringing the investment total to $1050. In the second year, 5% interest is earned on this new balance, which means that the interest earned in the second year is slightly higher ($52.50) than in the first. In the third year, with a new investment balance of $ , the investment will earn approximately $55.13, taking the final balance to $ This is different from simple interest, which is only paid on the capital invested and not on any interest earned. If your $1000 investment was to earn simple interest of 5% per annum for three years, the investment would earn exactly $50 for each of the three years. At the end of the three years the final balance would be $1150. While compounding can work wonders on your savings and investments, be aware that it is also applied to most debts. If you do not focus on reducing your debts quickly, compounding will cause your debts to blowout over the long term, as you will end up paying interest on interest. Credit is a form of loan that allows you to obtain goods before you actually pay for them, but which must be repaid within an agreed time frame and includes an interest payment. A debt is an amount of money that is owed to a person or an organisation. For example, if you have a loan or a credit card, or even a store-plan card from your local department store, the amount still outstanding is the debt you owe. A tax deduction, or tax-deductible expense, is an expense that can be offset against your taxable income that is, when calculating your total earnings for the year, you can deduct the full amount of certain types of expenses. This then reduces the amount of income upon which you will be required to pay tax. The accounting practice where the cost of specific, work-related items is systematically spread over the life of the assets. Depreciation can be offset against your taxable income for taxation purposes. Diversification is an investment strategy that involves investing in a range of different types of assets, rather than investing all your money in just one asset. In other words, don t put all your eggs in one basket. Government-funded financial counselling services are free and confidential and aim to assist you to regain control over your finances. A financial counsellor will help you get a clear picture of your overall 22

23 Insurance Interest Investing Long term Return Risk Saving Short term Superannuation financial situation, explore how you may be able to increase your income or decrease your expenses and will refer you to other appropriate services for additional information and assistance. A financial counsellor is different to a fee-for-service debt counsellor. Many debt counselling services are costly if at any stage a debt counsellor asks you to sign an agreement which includes paying any costs or fees, check this out carefully and get advice from a Government-funded financial counsellor. Insurance is a way of financially protecting yourself against potential risks and damage. Common types of insurance include car insurance, house and contents insurance, health insurance, income protection insurance and life insurance. Interest is the amount a borrower pays to a lender for the use of the lender s money. For example, if you borrow money from a bank in the form of a loan, the bank will charge you interest for the use of that money. On the other hand, if you invest your money with a bank (e.g. in a term deposit), or in a company (by buying shares), you effectively become the lender and your investment will be rewarded with interest as a payment to you. Investing is about building wealth. The aim is to invest money in assets that will grow in value over time so that you end up with more money than you contributed to that investment in the first place. Many investments earn income that can be spent (or reinvested), but the original amount of money is left invested so that it can continue to grow and produce more income. Investments that are held over long time frames, such as seven to ten years or more, are generally referred to as long term. When investment professionals talk about taking a long-term view of investing, they are often referring to time periods of 20 years or more. The return on an investment is the amount of money your investment earns. In investing, risk is the likelihood that your investment may go down in value and that you may lose money as a result. Saving is simply setting money aside for a specific purpose. Once you ve saved the required amount, the savings are then spent and the savings balance returns to zero. Investments that are held over short time frames, such as a few months, or one or two years, are referred to as short term. Superannuation is a vehicle used for setting aside money during your working life, in order to save money for use once you have retired. 23

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25 If you would like to get in touch with ANZ > Visit any ANZ branch during business hours > Call ANZ on , Monday to Friday, 8 am to 8 pm (Eastern Standard Time) > Visit > To make an appointment with an ANZ Financial Planner, ask at your local branch or visit

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