Rising interest rates can be unnerving, especially for those focused on saving. Here are some strategies to make your savings work for you even in a climbing rate environment:
1. SELL ONCE PRICES HAVE PEAKED
Just as there is a right time to buy, there is also a right time to sell. Just like groceries, investment properties have a ‘best before’ date. If you hold on to them after this time their quality and appeal diminish. When you notice that your cashflow and capital gain returns plateau, that is the sign of the price of the property starts to decline. Take a moment to look back over the reasons for selling versus the reason for not selling. Find which way is more sustainable, and the best type of income to fund your financial freedom.
2. CLAIM TAX DEDUCTION FOR EXPENSES INCURRED IN EARNING IN YOUR INVESTMENT INCOMES
Did you know that The Australian Taxation Office (ATO) allows you to claim deductions for some of investment cost? Not all investment expenses qualify for deductions; however, they are some common ones that generally do — such as,
Mortgage interest
Rental management costs
Insurance council rates
Utilities
Minor repairs
Depreciation
It will effectively reduce your taxable income and boosting your tax refund.
3. KNOW YOUR FINANCE AND BUDGET
Financial literacy is essential for everyone, regardless of income level. By understanding your finances and creating a budget, you can take control of your money and achieve your financial goals. If you spend less than you earn from your salary, you will have surplus funds. Your net worth is the difference between your assets (what you own) and your liabilities (what you owe). This will give you a snapshot of your overall financial health.
Understanding your finances and creating a budget isn't just about numbers on a spreadsheet - it's about taking control of your future. By gaining financial literacy and building a spending plan, you unlock a world of possibilities. Stay focused on your long-term goals, adapt your strategies, and make your money work for you!