Understanding a strategy and knowing when and how to apply it are two different things. It's also important to know that strategies to maximise your returns usually increase your investment risk. You may need to consider your risk profile and whether a particular strategy is right for you. It's always a good idea to discuss your investment ideas with a financial adviser.
Reinvest your distributions
Reinvesting the distributions or dividends you receive from your managed investment fund or direct shares is a simple strategy. It means that more money is available for compounding your investment returns, which can help you reach your goals, faster!
One of the easiest ways to keep your savings plan on track is to 'pay yourself first' - set aside a certain amount of your pay packet for yourself, before you pay for anything else such as rent or mortgage. This way you make sure that you save regularly. Start by making a budget to work out how much you can afford to save each month.
Borrow to invest (or gearing)
The saying goes 'You have to spend money to make money'. But it doesn't have to be your money. Borrowing for investment purposes, also known as leveraging or gearing, has a number of advantages and disadvantages.
Make the most of your superannuation
You may see super as just a percentage of your salary that you can't access. But it's important to remember it's your money. It's just being held for you until you retire.
The main idea behind superannuation is to help you build a nest egg which you then use to create an income in retirement (or semi retirement).