What Steps are You Taking to Secure Your Financial Future?

Over the past few months our attention has been on multiple interest rate rises, a potential recession and the possibility of the world banking system experiencing another GFC style event. However, there is nothing being said about how individuals can ensure they live a comfortable lifestyle, so there not overly affected by these events.

The laws of wealth creation

Research from Canstar indicates that the average 30 year old male has $27K in superannuation, while females have $22K. This suggests that millennials currently have $30K to $40K less than they need for a comfortable retirement. The research also indicates that if you are 60, the gap is over $230K with the average Australian male retiring on around $200K, while for females, it is much less.

We all desire a comfortable retirement but to achieve that we need to accumulate sufficient savings to fund that lifestyle into the future. ASIC’s Money Smart website suggests that couples need in the order of $700K to fund a comfortable retirement. These figures are unlikely to be a surprise, as this information has been repeated by the financial industry for decades. So, the question that needs to be answered is if we know how much we need in retirement, why do so many fail to plan for this.

I’ve been teaching the laws of wealth creation for decades and I know those who follow them can live a comfortable lifestyle today and into the future. The good news is that these laws are not hard to follow if you are prepared to make some wise decisions.

So, what are the three laws?

1. Spend less than you earn
2. Invest wisely
3. Leave it alone, so your money can compound.

Sadly, many fail to get started with the first rule to wealth creation, while the majority pretty much ignore the other two. We know there are three things that are certain in life, birth, death and taxes, if you are reading this then you have already accomplished two of these.

The lifestyle you lead will have a direct correlation to the decisions you make today. If you want to live a better lifestyle in the future, you need to start planning today how you’re going to get there. It’s far easier than you might think to follow the three laws to wealth creation.

What were the best and worst performing sectors last week?

The best performing sectors included Materials up 4.08 per cent followed by Information Technology up 2.55 per cent and Energy up 2.09 per cent. The worst performing sectors included Utilities up 0.12 per cent followed by Healthcare up 0.30 per cent and Communication Services up 0.72 per cent.

The best performing stocks in the ASX top 100 included Next DC up 11.78 per cent followed by Lendlease Group up 10.83 per cent and IGO up 9.72 per cent. The worst performing stocks included The Star Entertainment Group down 5.67 per cent followed by Block down 4.06 per cent and the Lottery Corporation down 3.10 per cent.

What's next for the Australian stock market?

The Australian stock market is up around 2.5 per cent in April and up over 6 per cent since the low on 20 March with the strong rise allaying the fears investors have had over the past few months. Consumer Discretionary has been the big mover up over 12 per cent since the start of the year with Information Technology only marginally behind. What is slowing our market rise right now is the Financials, Energy and to some extent Materials sector.

Financials and Materials are by far our biggest sectors accounting for almost 50 per cent of the total market size. Given this, for our market to be bullish both the Financials and Materials sector need to move in the same direction, which I believe may occur very soon.

In the short term, I expect the All Ordinaries Index may have one or two weeks down over the next month, although I believe the move will be short lived before the market rises once again. There are many stocks in the top 50 that are looking interesting right now and those who take the time to properly analyse both the fundamental and technical data, will be well placed to take advantage of the opportunities when the time comes.

As always, we need to wait for confirmation that the bull run has returned and while this is close, it is still too early to jump in just yet.

For now good luck and good trading.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the bestselling and award winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good book stores and online.