Strategies to help build your investments

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!

Invest regularly

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 9% 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). With the changes announced in the May 2006 Budget, from 1 July 2007, super will arguably become the most tax effective way to save for retirement for many investors. See how tax-effective is your super really? and the Budget 2006 - what will this mean for you? for more information.

The information contained in this document is based on the understanding Colonial First State Investments Limited ABN 98 002 348 352 AFS Licence 232468 has of the relevant Australian laws as at 1 July 2009. This document is not advice and is intended to provide general information only. It does not take into account your individual needs, objectives or personal circumstances. You should assess whether the information is appropriate for you and consider talking to a financial adviser before making an investment decision. Product Disclosure Statements (PDS) for products offered by Colonial First State are available from colonialfirststate.com.au or by contacting us on 13 13 36. You should read the relevant PDS and consider whether the product is right for you. Past performance and awards are no indication of future performance.