Grow Wealth With Small Savings

Increasing wealth over time, comes down to a combination of saving, investing and managing your debt. If done correctly you can increase your wealth over time. This does require some patience.

The key to increasing your wealth is saving money and investing it into something that generally goes up in time. The lowest risk of these is normally high interest savings accounts. Other popular ways to invest are buying Stocks, Managed Funds, ETF’s Real Estate.

Which one of these is right for you will depend on your circumstances, and it’s always advisable to talk to a professional about what’s right for you. In Australia, most household wealth is concentrated in two things, Real Estate and Superannuation Accounts.

Diversifying your investments and being strategic with your savings plan are also crucial. Rather than relying solely on one type of investment, consider spreading your investments across a variety of asset classes. This could include a blend of conservative options like high-interest savings accounts, and more growth-oriented vehicles such as shares or managed funds. By doing so, you reduce your exposure to risk and increase your chances of steady returns over time.

Additionally, understanding how taxes and government incentives apply to your investments can make a significant difference to your long-term outcomes. Take time to research or seek advice regarding tax deductions, government co-contributions, or investment grants that may apply to your situation. Small differences in fees, charges, or interest rates can compound greatly over decades, so always review the fine print and shop around before committing to any long-term financial product.

Another important factor in wealth building is to set clear, realistic goals and regularly track your progress. Whether you’re saving for a home deposit, building a share portfolio, or planning for retirement, breaking your goals into achievable milestones can keep you motivated and allow you to adjust your strategy as your circumstances change. Automating your savings and investments (by setting up automated payments into those accounts) help build discipline and ensure you consistently work towards your goals, even when life gets busy..

Having your own house can be appealing as it provides security, and is often a person’s biggest asset, however its not for everyone, and these are other ways to invest money. If you are buying your own home, ensure that you don’t stretch your budget too far. Remember too, there are additional costs to owning your own home, such as Insurance, Rates, and maintenance costs, so make sure you take these into account as they can add up to a lot.

Saving for your retirement is important and different countries have different setups and different incentives for retirement savings, so it’s important to talk to a professional and understand how to best take advantage of any incentives or tax breaks to maximize your retirement savings.

If you take this approach, you can supercharge your wealth.

If you have assets that are going up, reduce your debt and save money per year, your wealth can increase over time as the effect of all these things will improve your position more quickly than any single one would by itself.

Take the following example over a 10-year period for a family:

• Have House deposit of 250,000 saved so far.
• Has rental of $750 per week ($3250 per Month).
• Has After Tax income of around $10,000 per month.
• Have combined retirement savings of $150,000
• Have a 3-year-old car worth $30,000
• Has other household expenses of $2000 per month.
• Saves $4000 per month.
• Currently have a household wealth of around $500,000

Say for example the above family purchased a 1-million-dollar house, pays a mortgage of $750,000 with repayments of about $4,444 per month and has other household costs of $300 per month

If over a 10-year period, the house increases in value by 8% per year, it would be worth $1.85 million after 10 years.

If their retirement savings increased also at 8% per year and they added $20,000 per annum to their retirement savings per year, their retirement savings would be almost $640,000

Say they paid an extra $2000 per month off their loan per month, then after 10 years it would be: $300,000 so they would have a net worth be about 2.2 million.

There are plenty of other ways to increase wealth and this is just one example of what can be achieved.

Of course, this scenario assumes stable incomes, disciplined saving habits, and sustained property and investment growth—factors that may vary depending on economic conditions and personal circumstances. Diversifying investments, such as considering shares, managed funds, or additional property, can further cushion against market fluctuations and contribute to long-term financial security. Ultimately, the key lies in consistent planning, regular review of financial goals, and being adaptable as situations change over the years.

Disclaimer - The information provided on this article is of a general nature and does not take into account your personal financial situation, needs, or objectives. It is intended for educational and informational purposes only and should not be considered as financial advice. Before making any financial decisions, you should consider whether the information is appropriate to your needs and seek independent advice from a licensed financial adviser. While all reasonable care has been taken in the preparation of this information, we make no representations or warranties as to the accuracy, completeness, or currency of the content. We are not licensed financial advisers under the Corporations Act 2001. Any reference to financial products, strategies, or investments is general in nature and is not intended to be a recommendation. Past performance is not a reliable indicator of future performance.