Deciding when to start investing again

At some time during the recent bear market did you sell most or all your investments to cash? Or maybe have you been holding out on your regular investment plan because you haven’t felt comfortable? Watch the video below for some insights into how to decide when to start investing again.

At some time during the recent bear market did you sell most or all your investments to cash?

Or maybe have you been holding out on your regular investment plan because you haven’t felt comfortable?

If you made that decision based on an emotional trigger such as “feeling tired of losing money” then you face the real predicament of getting back in too late and missing out on big gains which often come in the early days of an economic recovery.

Watch the video below for some insights into how to decide when to start investing again.

Ten Best Paid Politicians – Value for Money?

With all the kerfuffle by politicians over the remuneration of company executives I found it interesting to read this list of the ten best paid national leaders. Originally compiled by The Times and then re-crunched by The Australian to show their payper capita. (If the link does not work you may also read the article here.)

Interestingly by this measure Kevin Rudd (the Australian Prime Minister) is earning roughly ten times as much as Barack Obama (President of the USA).  

When it comes to how much politicians are paid I’ve often wondered if it is evidence to support the saying that “you pay peanuts you get monkeys”.

That said, many company executives who contributed to the global financial crisis were paid multi-millions and now appear to have been monkeys in human suits.

When you boil it down, mostly this is a bit of fun. I think it is fair though to remember the rule of thumb that paying a high fee is no guarantee of quality, but if you expect quality then be prepared to pay for it.

Find Ten for Wealth

Find Thirty LogoAs I recently rode around a nearby lake with my daughter I noticed a Find Thirty logo painted on the pavement.

The Find Thirty campaign encourages us to complete 30 minutes of physical activity each day as an investment in our physical health.

Imagine the possibilities if we also found thirty minutes for wealth?

Imagine how financial literate you could become and how you could use that to create enough money to afford to do and have what you really want.

The twist – DO, not THINK

The interesting twist is that the Find Thirty campaign is not reading or thinking about exercise – it is doing exercise.

For all the hours I may have spent watching “The Biggest Loser” I haven’t lost a kilo of weight, beefed up my muscles or increased my aerobic capacity.

Find thirty to DO wealth creation

The great news is I think that if you spent 182 hours per year implementing wealth creation strategies you could become very wealthy indeed.

That means that making money is possibly easier and quicker than getting healthy. You beauty!

Even if you split it 50:50 and spent 91 hours per year learning and 91 hours implementing you could become a serious money master. How that would change your life!

Learning is important, but not enough

Please don’t misinterpret me. Your financial literacy is essential to how effectively you manage your money. Your knowledge helps you do the right things, in the right way and at the right time.

That’s why it is often said you don’t need money to make money. You just need knowledge. So definitely keep learning.

Financial literacy (and financial health) also shield you against fear and stress at times like we are experiencing in the economy right now.

Find Ten will just about do it

The great news is that unlike physical health, financial health doesn’t require everyday attention (for most). You can concentrate it in a couple of sessions, so long as you just do it.

I think that you’d be in good shape if you could average ten minutes per day on proactively building your financial health.

Sadly, many people spend less than that over a whole year!

An average of ten minutes could look like this

You could average ten minutes per day if you did this:

  • Up to one hour per week ensuring cash flow is on track and within budget. (The better you are the less time is required for this step.)
  • One hour per year benchmarking the performance of each of your investment assets (including superannuation)
  • Three hours every three years ensuring your personal insurance policies are still adequate
  • Four hours per year reviewing and evolving your long term strategy with your financial planner

In fact the more you outsource to a trusted financial professional as your partner the less time you personally need to spend to stay financially healthy.

Let’s just do it

For some people maybe it is time to spend less time learning and more time doing.

The benefits are:

  • More money for what you really want to do and have
  • Less financial stress (which often leads to relationship stress)
  • Happy days

I understand the predicament – there is so much wealth creation information out there that it is easy to become overwhelmed. For fear of doing the wrong thing you do nothing. The problem is that delay is the greatest cost in wealth creation.

The great news is that I have spent the last nine years working out what strategies have the highest impact for the lowest effort. So, for help in taking action with the right strategies for you call me directly on 1300 669 101.

Six rules can help you avoid Sod’s Law

In The Australian today, Peter Switzer writes a good article that extracts fundamental lessons for us all from the recent loss of $100 million by Sydney lawyer, Chris Murphy. Read the full article here.

When seeking investment information it is easy to be attracted to the neon lights and fanciful claims of certain investments. But it is essential to look past the glamour and understand the core of what is going on.

Is it a wolf in sheep’s clothing? Or a beautiful swan within an ugly duckling?

If in doubt, return to the fundamentals and stick to what you understand. Complexity does NOT equal value. Simple is often the best. 

Delusion lets smokers breathe easy

MOST Australian smokers are in denial about their habit.

A survey by the Cancer Council Victoria reveals that 60 per cent of smokers cling to “self-exempting beliefs” that smoking-related diseases such as heart and lung cancer are caused by air pollution or genetics.

Tamara Davis, The Weekend Australian, December 29, 2007

Self-exempting beliefs don’t just apply to smokers and are not limited to our health habits. The article headline could easily be changed to “Delusion lets us spend easy”

A non-smoker probably reads the above quote with disbelief. With all of the advertising over the recent decades how could anyone still think that smoking and lung cancer are not linked?

So, as we enter 2008 ask yourself if you have any self-exempting beliefs that are negatively impacting on your wealth.

For example:

I’m young so don’t need to start saving and investing for my retirement.

I invest in residential property so can ignore my superannuation.

I’m fighting fit, drive and live carefully so don’t need insurance because it’ll never happen to me.

3 tips to manage your mortgage stress

Have recent rises in interest rates left you feeling the strain of meeting mortgage repayments? Or perhaps are you concerned that if interest rates go much higher you will be under financial stress? If so, this interview is perfect for you.

This morning I interviewed expert Mortgage Professional, Damian Day of Ardent Finance to uncover some of the loan options that may be available to you if you are concerned about your repayments.

You will learn about:

  • The value of refinancing to consolidate debts at a lower rate
  • Where and how to shop around for a lower interest rate
  • How fixed interest rates can be used to provide cash flow security
  • The important traps of refinancing and fixing rates that could cost you much more than you gain in lower interest

The interview goes for 20mins 20 secs and could save you thousands of dollars in loan interest. I encourage you to make a cup of your favourite beverage and listen now.

For expert assistance on creating your debt structure contact Damian Day by telephone on 1300 793 813 or e-mail dday AT damianday DOT com

The cost of retirement

For most people the major goal of wealth creation is to reach the point of financial independence. That point is when you have enough net wealth that you can choose to never work again and you will be able to meet your lifestyle expenses. (Commonly this is referred to as retirement but the future seems to be that people will choose to continue working past the point of financial independence.)

One of the most common questions I am asked is “how much net wealth do I need to retire?” The answer to that question is very dependant on the lifestyle you plan to lead in retirement. If you are unsure how to define that lifestyle then one place to start is by looking at what current retirees spend in retirement.

Today, Westpac and ASFA (The Association of Superannuation Funds of Australia Ltd) released their latest Retirement Standard research. (Link to the research). The average retired Australian couple spends just under $50,000 per year in retirement to live a comfortable lifestyle. This assumes that they own their own home, and includes some travel but is certainly not a lavish lifestyle.

It is worth paying attention to such research of actual expenditure. Most clients I see guess they will spend lower than that amount. Yet when they actually describe their planned retirement lifestyle and then cost that lifestyle it is significantly higher than the “comfortable lifestyle” definition used in the research.

So whilst current retirees are living off that amount my guess is they do that partly by necessity and partly because they grew up in a different generation with different ambitions. Later generations appear to have much higher expectations. If that includes you then you will need to start planning early or be prepared to lower your lifestyle expectations.

Is your money mindset robbing you of riches?

Have you ever wondered why some people seem to have most of the wealth and continue to acquire more, but you don’t appear to be getting ahead so quickly? If so, it could be your money mindset.

In this interview on the TV show Wake Up! WA I reveal how your beliefs, values and thoughts about money act as obstacles to you acquiring greater prosperity and wealth.  I also share what to do about it.

Video reproduced courtesy of Ego Creative Media.

What thoughts do you have that potentially rob you of riches? Please let me know by leaving a comment below.

Apparently you are not responsible enough to be investing by yourself

“…weak and unsophisticated investors should not be permitted to make high-risk investments unless they are totally aware of the risks”.

According to an article in The Weekend Australian the above is the opinion of Tony Lewis of Lewis Securities in response to recent loses experienced by investors in income based products. Lewis goes on to suggest that “applications for new investments (or rollovers of maturities) by public lending institutions should be certified by an Australian Financial Services Licence holder or their representative.”

[Reference: “Certification needed to protect fools who rush into financial products”, by Tim Blue; The Weekend Australian; July 28-29, 2007. Read the full article here.]

Yes, it appears that many people have been lured into high risk investments by virtue of the associated marketing and advertising information. But if that is all they base their investment decisions on it is foolish, as the article’s headline suggests.

Is a broadly applied, paternalistic approach really the solution to foolish behaviour of some individuals?

Two consenting adults
In my view, someone completing an application form based on their own research (no adviser involvement) is entering into a situation that is akin to intercourse between two consenting adults. Yes, it is likely that at least one of the parties has presented themselves to be more attractive than reality. But if they proceed with fervour and no protection and then suffer negative consequences then a wonderful learning opportunity results. If the lesson is not learnt the universe is bound to create several more learning opportunities for the individuals involved.

“Fools and their money are soon parted”, so the saying goes.

We expect adults to take personal responsibility for their sexual actions yet when it comes to their money somehow adults are no longer adequately responsible. I would have thought it was the other way around – as far as I am aware no hormones are involved in investment.

How would you feel?
If you are reading this article it is likely that you are an active investor who likes to do your own research, probably without the aid of a financial adviser. Further, you may not yet meet the legal definition of a sophisticated investor. So, how would you feel if you were told that you could not complete an application form without official sign-off by an authorised adviser?

By leaving a comment below, please let me know how you would feel in the above situation. (You can be anonymous)

Also please let me know your view on how these situations should be managed? Am I too harsh in expecting personal responsibility; should we legislate to protect people against themselves?