The desire for passive income frequently comes up as a goal when I speak with new clients. The idea of earning money before we even get out of bed holds obvious appeal.

So this week in the podcast, I thought I'd cover all there is to know about passive income. Where it can be sourced, how you can create it, some of the challenges and misconceptions, tax considerations, and some tips for success.

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In this episode we take a look at the most important concept in finance to understand - compounding.

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Consistent with most developed nations, Australia provides incentives for people to save for their retirement. Being self-sufficient in retirement reduces the need for Age pensions and other forms of Social Security.

But saving for your retirement means sacrificing the here and now. Money socked away for your 70s and 80s, is money that you can't enjoy in your 20s and 30s. The opportunity cost is real, so the incentives need to be meaningful.

Fortunately our superannuation system does indeed provide meaningful incentives in the form of tax concessions. There are tax concessions throughout the entire life of your superannuation journey. But I find that sometimes the biggest tax concession of all is overlooked or underappreciated. This week I want to ensure that you understand exactly where the greatest opportunity exists so that you are making the most of the superannuation tax concessions.

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It's been a wonderful time to be an investor recently. As regular readers of our GainingCHOICE e-mail will know, the current one year numbers for the trio markets we track are all in double digits, with the US index over 30% up on the year, and the Australian and Emerging markets both up around 20%.

So where to from here? Do such large gains over the past year mean we're destined for a fall? Or is this the early days of a new boom?

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There's lots of risk when it comes to investing and building wealth. Inflation risk, market risk, timing risk, concentration risk, liquidity risk, credit risk, legislative risk, reinvestment risk, currency risk, leverage risk, and plenty more.

Some risk we want to take – the ones that we can handle and will reward us with extra returns. Other risks provide no benefit to us and so should be avoided at all costs.

Longevity risk, the topic of this week's episode, falls into this second bucket, though it's solution involves the deliberate undertaking of other risk. It's an interesting one for sure, so let's dive in.

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We all want to build wealth and have financial security, have choices in life.

This week I wanted to explore the basic framework for how you can make that happen. Your home, your super, your investments, and the financial decisions that sit around those all play their part.

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What's Possible has now moved to its own channel. Links are below for the most common players, or just search What's Possible in your podcast app.

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This week's episode is inspired by the number one question we get asked by new clients - am i on track to retire?

This week I take you through how we go about answering this question. What are the inputs required, and the key things for you to consider?

For help, visit our website: www.guidancefs.com.au

Disclaimer

Could you spend 9 months through winter down in Antarctica? This week I chatted with Matt Roberts who did exactly that with the Australian Antarctic division. He shares how he got this opportunity, the training required, and what life's like at the bottom of the world.

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Borrowing to invest he is unquestionably a frequent contributor to wealth accumulation. Few of us would buy a home without using a mortgage, and it is a rare business that is able to grow without some form of debt.

Borrowing to invest in the stock market has many positive attributes. Shares can be sold quickly, enabling you to reduce or clear your debt at short notice were your circumstances to change. Transaction costs are low. And diversification is easily obtained.

There are several ways in which you can borrow to invest in the stock market. Under a debt recycling approach, it is assumed you are using equity in your home.

Borrowing to invest magnifies an the outcome. If you invest $1000 and it increases in value by 10%, you have gained $100 in wealth. If instead you matched that $1000 with an equal amount of debt, and your now $2000 investment grew by the same10%, your wealth has increased by $200, double that of the original example. Now of course you need to back out the cost of the debt, but this simple example illustrates the impact.

Investments don't always go up however, so the magnification brought about through gearing works in both directions. If the value of your investment rises, gearing enhances your outcome. But if the value of your investment falls, gearing makes the situation worse.

For this reason, there's a few key criteria that you should tick-off before embarking on this strategy.

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