stevo68
18th November 2013, 12:09 PM
G'day All,
Thanks for popping by, I hope you find the following information useful. I recently asked a group of people what they thought was the reason that the average person doesn't achieve financial independence or create wealth. Off rattled the usual responses, don't earn enough, raising a family, don't know how, just trying to pay off the mortgage and so forth. Incorrect on all accounts. The main reason is apathy. We all want financial independence, we all want to have a good retirement outcome but the majority of people do nothing about it. They don't seek advice and they don't educate themselves.
Of the survey that I recently did and based on the part applicable to AULRO members, 70%+ have never had a financial plan done. That's like jumping in the Landy wanting to traverse the Simpson desert without a map, supplies, recovery gear, GPS or any other type of instrument to show you the way. In other words, if you don't plan for the trip, you aint gunna make it. So how on earth is anyone going to achieve financial independence or some level of wealth if they a) don't have a plan and b) don't educate themselves or c) seek advice.
I don't pull any punches on this because I regularly see the outcomes of people who don't plan, who don't protect themselves, who have worked their whole life and when it comes to retirement, are approaching it with trepidation.
So what can YOU do? For one, you can PM me and organise a time to catch up over a coffee in one of our offices on the Gold Coast, Tweed or Brisbane. Otherwise can be done over the phone and email.
Or you can read the following information, print it off for your friends, colleagues, children if you have them. Then PM me for any questions or queries.
Financial Planning- Not Rocket Science
Now this may sound like I am shooting myself in the foot, but at the end of the day, financial planning isn’t rocket science. Despite that, so many people do not have a financial plan and subsequently don’t achieve their goals during their working life and hence retirement looks a tad bleak. It’s when it is looking a bit bleak that they then seek advice, whereas if they had sought advice prior to that, then their life could have been a lot different.
So what are some essential rules?
1. Start as early as possible.
This shouldn’t come as a surprise, but it tends to always be in hindsight. Have you heard of compound interest; imagine if you started putting away $100 a month in your 20’s.
The first and basic rule is to start financial planning as early as possible. Aside from winning Lotto or a massive inheritance, one of the keys to creating wealth is to start as early as possible. Time is one of the key factors to creating wealth.
2. Put money away on a regular basis, for some folks, this is called “savings”.
Saving requires discipline. Some are good at it, most not so. Temptation is the killer of savings. However at the end of the day, you determine your financial outcomes, regardless of your income. A person earning $36,000 per year could be $790,000 better off over their working life, simply by improving their understanding of money and becoming more financially literate. (Understanding Money, Assistant Treasurer Media Release #48, Financial Literacy 6 June 2005).
So regardless of what you earn, put some away each month. As you earn more, increase your savings. Over time you will find that it becomes part and parcel of every day life. It is then what to do with those savings to make a real impact.
3. Long Term Thinking.
Creating wealth isn’t short term; it isn’t a get rich quick scheme. We all know how those sort of things end up. Financial planning takes a long term focus, in general terms, 5-7 years or more.
One of the main reasons is that long term investing reduces the impact of short term volatility. Also as already noted are the aspects of time and increased growth due to compounding which all assists with creating wealth.
4. Be Realistic.
When it comes to your financial goals, be realistic. Your financial goals should be something that with hard work and time that you can actually achieve. Wealth creation in the most is about improving your current situation. There is little point dreaming of a Range Rover Vogue when your cash flow has the affordability of a Holden Barina. Your goals should be "SMART financial goals". Broken down they should be Specific, Measurable, Achievable, Realistic and Timebound. Part of being realistic is also making sure that you select the strategy that is appropriate to achieve your goals. In some cases it may require a higher level of risk, in other cases it can be achieved with a reduced level of risk. Knowing your risk profile is important. At the end of the day, there is no money tree in the back of the garden. First and foremost you need the desire combined with common sense to a brighter financial future.
5. Spread your risk.
This is the old adage of not putting all your eggs in one basket. Any investment carries an inherent risk. Its how one mitigates the risk that makes the difference between a great outcome and a poor one. One of the key area’s to this is diversification, having your assets across different classes and inline with your risk profile. It is also important to review your portfolio and re balance if necessary.
6. The Inflation Threat.
One of the other key reasons to having the right mix and returns on your portfolios is to counter inflation. Inflation can erode all that hard work you have done if you are not on top of it.
7. Understanding Risk and Return.
Pretty simple really, the bigger the risk, the bigger the potential return. Albeit comes with the kicker of a potential bigger loss. Hence why important to know your risk profile and base your portfolio around it. However don’t be expecting massive returns on a low risk allocation. As a lower risk option comes with lower returns. The biggest risk though is to do nothing. However for those that do take the risk, taking into account the points raised in this update, they make more money and increase their tax deductions which also goes to helping to create wealth.
Many moons ago when I was a finance broker, a client quibbled with me over the few dollars a month difference on my quote compared to his bank. I noted that firstly I had my quote to him same day, his bank took 2. Secondly I noted that you can mow your own lawn or get someone else to do it for you, but don’t expect it to cost the same. I told him to knock his socks off and do it himself with the bank. A week later he went with me.
The point being is that anyone can do all the above, if they have the time, expertise and knowledge. However if you use retirement incomes as a barometer, then it would suggest that whilst this isn’t rocket science, most people don’t do it or get the professional expertise to help them.
So call or email me for your free financial health check up, normally takes about 2 hours and from there you decide whether you want to organise a financial plan. The main thing is to take that first step towards either controlling or bettering your financial future. It’s that simple. If not for you, share this with someone else who may benefit.
Thanks for reading and sharing,
Regards
Stevo
Thanks for popping by, I hope you find the following information useful. I recently asked a group of people what they thought was the reason that the average person doesn't achieve financial independence or create wealth. Off rattled the usual responses, don't earn enough, raising a family, don't know how, just trying to pay off the mortgage and so forth. Incorrect on all accounts. The main reason is apathy. We all want financial independence, we all want to have a good retirement outcome but the majority of people do nothing about it. They don't seek advice and they don't educate themselves.
Of the survey that I recently did and based on the part applicable to AULRO members, 70%+ have never had a financial plan done. That's like jumping in the Landy wanting to traverse the Simpson desert without a map, supplies, recovery gear, GPS or any other type of instrument to show you the way. In other words, if you don't plan for the trip, you aint gunna make it. So how on earth is anyone going to achieve financial independence or some level of wealth if they a) don't have a plan and b) don't educate themselves or c) seek advice.
I don't pull any punches on this because I regularly see the outcomes of people who don't plan, who don't protect themselves, who have worked their whole life and when it comes to retirement, are approaching it with trepidation.
So what can YOU do? For one, you can PM me and organise a time to catch up over a coffee in one of our offices on the Gold Coast, Tweed or Brisbane. Otherwise can be done over the phone and email.
Or you can read the following information, print it off for your friends, colleagues, children if you have them. Then PM me for any questions or queries.
Financial Planning- Not Rocket Science
Now this may sound like I am shooting myself in the foot, but at the end of the day, financial planning isn’t rocket science. Despite that, so many people do not have a financial plan and subsequently don’t achieve their goals during their working life and hence retirement looks a tad bleak. It’s when it is looking a bit bleak that they then seek advice, whereas if they had sought advice prior to that, then their life could have been a lot different.
So what are some essential rules?
1. Start as early as possible.
This shouldn’t come as a surprise, but it tends to always be in hindsight. Have you heard of compound interest; imagine if you started putting away $100 a month in your 20’s.
The first and basic rule is to start financial planning as early as possible. Aside from winning Lotto or a massive inheritance, one of the keys to creating wealth is to start as early as possible. Time is one of the key factors to creating wealth.
2. Put money away on a regular basis, for some folks, this is called “savings”.
Saving requires discipline. Some are good at it, most not so. Temptation is the killer of savings. However at the end of the day, you determine your financial outcomes, regardless of your income. A person earning $36,000 per year could be $790,000 better off over their working life, simply by improving their understanding of money and becoming more financially literate. (Understanding Money, Assistant Treasurer Media Release #48, Financial Literacy 6 June 2005).
So regardless of what you earn, put some away each month. As you earn more, increase your savings. Over time you will find that it becomes part and parcel of every day life. It is then what to do with those savings to make a real impact.
3. Long Term Thinking.
Creating wealth isn’t short term; it isn’t a get rich quick scheme. We all know how those sort of things end up. Financial planning takes a long term focus, in general terms, 5-7 years or more.
One of the main reasons is that long term investing reduces the impact of short term volatility. Also as already noted are the aspects of time and increased growth due to compounding which all assists with creating wealth.
4. Be Realistic.
When it comes to your financial goals, be realistic. Your financial goals should be something that with hard work and time that you can actually achieve. Wealth creation in the most is about improving your current situation. There is little point dreaming of a Range Rover Vogue when your cash flow has the affordability of a Holden Barina. Your goals should be "SMART financial goals". Broken down they should be Specific, Measurable, Achievable, Realistic and Timebound. Part of being realistic is also making sure that you select the strategy that is appropriate to achieve your goals. In some cases it may require a higher level of risk, in other cases it can be achieved with a reduced level of risk. Knowing your risk profile is important. At the end of the day, there is no money tree in the back of the garden. First and foremost you need the desire combined with common sense to a brighter financial future.
5. Spread your risk.
This is the old adage of not putting all your eggs in one basket. Any investment carries an inherent risk. Its how one mitigates the risk that makes the difference between a great outcome and a poor one. One of the key area’s to this is diversification, having your assets across different classes and inline with your risk profile. It is also important to review your portfolio and re balance if necessary.
6. The Inflation Threat.
One of the other key reasons to having the right mix and returns on your portfolios is to counter inflation. Inflation can erode all that hard work you have done if you are not on top of it.
7. Understanding Risk and Return.
Pretty simple really, the bigger the risk, the bigger the potential return. Albeit comes with the kicker of a potential bigger loss. Hence why important to know your risk profile and base your portfolio around it. However don’t be expecting massive returns on a low risk allocation. As a lower risk option comes with lower returns. The biggest risk though is to do nothing. However for those that do take the risk, taking into account the points raised in this update, they make more money and increase their tax deductions which also goes to helping to create wealth.
Many moons ago when I was a finance broker, a client quibbled with me over the few dollars a month difference on my quote compared to his bank. I noted that firstly I had my quote to him same day, his bank took 2. Secondly I noted that you can mow your own lawn or get someone else to do it for you, but don’t expect it to cost the same. I told him to knock his socks off and do it himself with the bank. A week later he went with me.
The point being is that anyone can do all the above, if they have the time, expertise and knowledge. However if you use retirement incomes as a barometer, then it would suggest that whilst this isn’t rocket science, most people don’t do it or get the professional expertise to help them.
So call or email me for your free financial health check up, normally takes about 2 hours and from there you decide whether you want to organise a financial plan. The main thing is to take that first step towards either controlling or bettering your financial future. It’s that simple. If not for you, share this with someone else who may benefit.
Thanks for reading and sharing,
Regards
Stevo