Learners are earners

Most financial advisers are more at home with account-based pensions, contribution caps and seniors tax offsets than first home saver accounts, budgeting and HELP debt. But while younger people might not have large sums to invest, Hewison Private Wealth has found they are interested in learning about managing their money.

A private client adviser, Simon Curtain, says the main issues for younger investors are budget, university debt or HELP, and saving for their first home. Those who have a home want to know whether it's better to invest any extra cash or use it to reduce their mortgage.

Hewison recently held its first seminar for the under-35s to look at these and other issues and is hoping to hold further seminars in coming months. Curtain says while there may not be a lot a financial planner can do for these people at the moment, they are looking for education and information and will hopefully feel more comfortable about getting advice once they build their financial situation.

Super, he says, isn't a big issue for this age group, but they do need to think about where their money is invested, whether the investment option suits them for the long haul (as younger people can often justify a more aggressive investment approach), and the fees they are paying, as higher fees can erode balances significantly over longer periods.

Curtain says younger people have often heard that negative gearing is a good thing but need to understand exactly how it works.

Yes, it can be used to reduce your tax bill but that's because the investment is running at a loss. For the strategy to be successful you need to be confident the investment will grow in value by more than these losses in the longer term.

On the question of paying off debt versus investing, he says there is no easy answer but a good rule of thumb is to focus on the debt first.

You'll pay tax on any investment returns that you make versus a guaranteed ''return'' of about 7 per cent for making extra repayments on your mortgage. Getting your debt under control will also put you in a better position to invest later.

Five tips for making the most of your tax refund

1. Pay off your credit card or put the money towards debts such as car loans. Don't use your tax return to pay down HELP debt - this is a no-interest loan and is best paid off in time.

2. If you have a short-term savings goal, look at putting the money into a high-interest account or a mortgage offset account if you have a home loan.

3. If you have been thinking about purchasing your first property, how about starting a first home saver account with your tax refund? The federal government will make a contribution on top of your deposits.

4. Have you thought about your super? Now is the time to consolidate multiple super accounts and invest your tax refund to kick-start compounding wealth over time.

5. Start investing in shares. Listed investment companies, such as AFIC, are a great way to start with minimal risk and effort.

Source: Hewison Private Wealth

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