Investing in shares
Many Australians invest their money by buying shares, which are units of ownership in a company. Large businesses often have thousands of shareholders, allowing shares to be bought and sold like goods. The value of shares changes with the company’s value, affecting the investor’s stake. Shareholders benefit from profits through dividends or extra shares and may see capital growth if share values rise. Trading shares occurs via the Australian Securities Exchange (ASX), where stockbrokers buy and sell shares for a fee on behalf of adult individuals.
FIGURE3 Stockbrokers buy and sell shares on behalf of their clients.
Saving for retirement Retirement in Australia can occur at any age, but individuals must be able to cover their living expenses. The government provides a pension for those aged 66–67 (depending on the date of birth) who retire. This pension covers basic needs but is not luxurious. Individuals with sufficient finances should plan for retirement through superannuation to become self-funded retirees and avoid reliance on the state pension. What is superannuation? Superannuation, sometimes shortened to ‘super’, is a compulsory savings scheme whereby employers contribute an additional percentage of an employee’s grosswage into a superannuation fund . Employees can also choose to contribute to this fund, thus increasing the overall amount they will receive at retirement. How much any employee chooses to contribute is up to them. There are laws in place that determine the age at which you are eligible to access your superannuation savings. In general terms, people cannot access their superannuation unless they retire, reach the official retirement age or have an illness/medical condition that prevents them from working again. By the time people retire, there may be 40 years of contributions in the individual’s fund, so this may be enough to fund retirement. Any extra contributions the person makes during their working life can help achieve this goal. 22.3.3 Budgeting and savings plan As you have probably realised by now, budgeting for long-term goals works on the same principles as the budgets that we looked at in lesson 22.2. The money that is left once we have subtracted our expenses from our income is usually referred to as the money that we can save. Savings add up over time in our bank accounts and earn interest for us at the same time. The money that we save can eventually be used for major financial purchases, such as providing a deposit for a house, or it can be placed into a pension fund for retirement.
634 Jacaranda Humanities Alive 8 Victorian Curriculum Third Edition
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