Importance of long-term financial strategies

Question 1

What are the three main types of plans:

Answer 1

• short-term plans
• medium-term plans
• long-term plans

Question 2

What are short term plans?

Answer 2

where the goals are achieved in one to three years

Question 3

What are medium-term plans?

Answer 3

with the goals achievable in four to six years

Question 4

What are long-term plans?

Answer 4

where the goals are achieved in seven or more
years.

Question 5

What is the most common long-term financial
goal?

Answer 5

The most common long-term financial
goal is to fund a comfortable retirement.

Question 6

What age can Australians access their super, and why? What is the result of this?

Answer 6

Because Australians are living longer, the
government is increasing the age that people
can access the aged pension to 67 years.
Even then, this pension will provide only
enough funds for a very basic lifestyle.

Question 7

What is superannuation?

Answer 7

Superannuation (commonly just called ‘super’) is money that’s put aside and saved while you’re working.
A superannuation fund is a compulsory savings account where each time you are paid, your employer will
allocate a percentage of your income to the account. You may also want to pay additional money into your
account because this does have some tax advantages.

Question 8

How does superannuation work?

Answer 8

You should choose your own superannuation fund and not just accept the one the employer uses. Your
decision should be based on the fund’s fees and its history of returns. These vary considerably. It is also
very important to have just the one ‘super’ account because this will minimise your fees and maximise
your returns.