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Circuit break your bad spending habits

Circuit break your bad spending habits

Written by R. A. Stewart

Bad spending habits can quickly add up and cost you a small fortune over a period of time. Buying coffees downtown may cost you a fiver but if you are doing it daily then that is $25 per week which you could have used for some other purpose. 

A bad spending habit can be very hard to break so why not use a circuit breaker. That is, decide that you are not going to do this bad habit for 24 hours. See how you go.

Coffees

Have you ever thought about how much you are spending on coffees when you are downtown? Let’s think about it, $5 spent on a coffee + whatever you choose to eat with your coffee adds up to a small fortune. If you are spending $5 on a coffee and $4 on a couple of sandwiches then that is $45 per week. That is assuming you work Monday-Friday. Do the maths and your $45 per week adds up to over 2k per year. If you need to find an extra 2k per year to balance the budget or to go towards your other goals then this is a good starting point.

Eftpos card spending

Using the eftpos card is so convenient, so many of us do it without even thinking about how it is affecting our bank accounts. There is a cost to prolific eftpos use and that is high bank fees at the end of the money. Breaking out of the habit of using our cash instead of cards helps us to understand that it is real money we are spending. Putting a 24 hour halt to our eftpos card use will help us to break this costly habit. 

Buying lunches

This is another area where you can save a bit of money. If you are into the habit of buying your own lunch instead of making it then why not decide that you will not buy your lunch for today. If you can put a circuit breaker on this habit then it may help you to form the habit of making your own lunch.

Credit card spending

If you have a credit card spending habit then the question has to be asked, “Are you living beyond your means?”. I know lots of people who have never owned a credit card yet are on benefits or low paid jobs. Lifestyles can be adjusted according to your level of income but the problem is when you have accumulated debts then all of a sudden have lost your job. If you have made a habit of using your credit card then make a habit of not using it for a day at a time then after a week or two it will become a habit and your finances will be in a better shape. Adopt the motto, “If I don’t have the money I don’t buy it!”.

Gambling

This habit can destroy a family’s financial future. Placing a 24 hour break on all gambling activities will help you to break the habit. Unfortunately, some people are addicted to some forms of gambling. If this is you then, it is time to seek help. 

Internet spending

This is another drain on your finances. Surfing the internet looking for stuff to buy can drain your bank balance. This is money which could have been put toward some investment. 

Alcohol, smoking, and making unnecessary trips in your car are other drains on your finances.

It is not how much money you make which will enable you to get rich, it is how much you save and invest. It is the old saying, “Different outcomes are due to different choices,” therefore if you want a different outcome in your life from what you are experiencing then make different choices.

About this article

The information in this article is of the writer’s own opinion and may not be applicable to your own personal circumstances therefore discretion is advised. You may use this article as content for your blog or website. 

Read my other articles on www.robertastewart.com

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Are you a responsible Investor?

Are you a responsible Investor?

Written by R. A. Stewart

Answer these three questions to find out, but be honest.

Question number 1:

Do you blame others for losses which may or may not have been out of your control?

If you had money invested in a company which went into liquidation, do you take responsibility for the loss and learn lessons from it or do you find a scapegoat and play the blame game by finger pointing at others. Several finance companies went under in New Zealand during the Global Financial Crisis of 2007/2008 and there were sad stories of investors who had their life savings invested in the one company. In other words they had placed all of their eggs in the one basket. If they were honest, these people would have admitted that they were greedy because these companies were paying investors higher than normal interest rates. Financial experts were saying prior to these meltdowns that the higher interest rates do not reflect the risk investors are taking.

Question number 2:

Do you improve your financial literacy by reading finance and investing books?

Unless you educate yourself in matters of finance and investing you will be at the mercy of sharks who will take advantage of your ignorance. Sad stories appear in the newspapers now and again of people losing money because of some financial mistake. If they had sufficient financial literacy they would have made different decisions. The ability to discern whether something is right or wrong is sometimes down to education and experience.

Question number 3:

Do you save something from every payday to invest?

It is not how much you make which counts, it is what you manage to save from every payday.

Financial experts say that you should save at least 10% of your income for the purpose of building your wealth. In this day and age there is no shortage of investment opportunities and it only takes $14 or so to start a share portfolio.

Question number 4:

Do you make your own investing decisions?

Some people like to leave all of the decision making to others. Why?

Because they want someone else to blame if everything turns to custard and losses will occur. It is all very well asking a financial adviser where you should invest your money but investors need to take responsibility for their own decisions and use their common sense.

Fund managers make decisions on investors behalf but as an investor it is your choice of whether to invest in growth, balanced, or conservative funds, and that all depends on your time frame.

A mature person admits their mistakes and treats them as a learning experience and uses the lessons learned in order to make better decisions in the future.

About this article

You may use this article as content for your blog/website, or ebook. Feel free to share this article on social media.

Read my other articles on www.robertastewart.com

 

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Prioritizing your spending

Prioritizing your spending

Written by R. A. Stewart

Life is all about making priorities and it is not all about money and how you prioritize your spending but about what you do with your time. We have different financial commitments and different levels of income but when it comes to time, we all have an allotted 24 hours in the day, no more and no less but our income and how we earn our income will have an effect on how much time we have to devote to the important things in our life.

Many people sacrifice their time for money by spending all of their time working leaving little time for anything else. They are out of balance.

If you have a specific goal in mind such as saving for a house deposit then the sacrifices may be worth it in the long term. Maybe because only you will know whether the long days were truly worth it. It all depends on what your priorities are.

What factors should you consider when setting priorities?

Here are several to consider:

Your commitments

Your debt levels

Your age

Your family circumstances

Your health

Your career

Your pets

It is important that you base your priorities on what is important to you and that you do not try to copy someone else’s figures. There is no one size that fits everyone; it is your own needs and wants which determine how you are going to prioritise your spending.

Everyone has different levels of commitments; these have to be managed as best as you can. Commitments can be financial such as a mortgage or other debt or something more personal such as a relationship. 

Your age is another factor; you are not going to take out a 30 year mortgage when you are 60. If you are in your twenties you will have different priorities. As a young investor you can take more risks with your investing strategy because you have more time to recover from a financial meltdown.

That does not mean being reckless with your investing but rather; taking calculated risks.

Your family circumstances are another factor to weigh up. If you have kids then you will have less disposable cash to play around with than if you are single. The flip side is that if you are in a relationship then you have the advantage of having two incomes which will make it easier to save for major life events such as having kids. It is a good idea to put aside money for this purpose.

Then there is your health to think about. If you are fit and healthy then that is great but as we all know, Father Time catches up on us sooner or later. If you have health issues which lessens your chances of reaching the retirement age then your priorities need to be different from those who are healthy.

Then your career or job is a priority. It has to be your top priority because it pays the bills. It is where you spend so much of your time so a carefully chosen career will help make your life more meaningful. Adding different strings to your bow will give you more options. Learning does not end once you leave school is a lifelong project.

Your pets can bring enjoyment to your life but they can also become a burden to your finances as a lot of people have found during the cost of living crisis. The SPCA were swamped with cats and dogs because people could not afford to keep them. When deciding whether to get a dog or a cat it is important to work out how much this is going to cost you. It is also important to consider the fact that keeping pets fits the discretionary spending category and that money spent on them will be better off going towards the mortgage if you have one or towards your retirement fund. 

As far as pets are concerned, many people let their hearts rule their heads; I mean honestly, why else would one spend a grand on a vet bill for a cat or even more than that on a dog when it would be cheaper just to have the animal put down?

 

This article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore, discretion is advised. You may use this article as content for your ebook, website, or blog. Feel free to share this article.

 

www.robertastewart.com

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My thoughts on Bitcoin reports

Bitcoin investor loses $2m

That is, if the reports in the media are true; it all depends on the real facts. 

An investor it is claimed lost $2m on the Bitcoin he had invested with FTX. We all know that this is a crypto exchange which went bust.

What we do not know is whether the $2m lost in this disaster or whether his original investment into Bitcoin was $100k, $200k, $500k, or $1m.

If his original investment was $500k then that is the amount of his true losses. 

I remember in 2022 when the Bitcoin halving took place, the newspaper report stated that Bitcoin investors lost half of their money. This was only true if an investor had bought Bitcoin during its previous peak. If I had sold my Bitcoin then I would have received more than my original investment. It all depends on when one had bought their Bitcoin.

Leaving all that aside, there are some lessons to be learned here; the main ones being:

1 Investing in Bitcoin in no substitute for your retirement fund

2 Do not invest in Bitcoin if the loss of your money will cause you considerable financial hardship

3 Diversify between different Bitcoin exchanges. That is coinbase, blockchain, and others which are available.

4 Do not invest in Bitcoin if you cannot stomach the thought of losing your money.

It is important to keep in mind that whenever there is a chance for capital gain, there is a chance for capital loss. Investors are betting on the chances that Bitcoin will rise in price. It is just a matter of understanding the risks when investing in Bitcoin.

There is no method of investing which will guarantee that you will not lose or that you will receive an x amount in return. Past performance is no guarantee that whatever happened in previous years will repeat itself in the future.

Have some spare cash to invest in Bitcoin and are prepared to lose it?

Then check out the coinbase, a well-established crypto-exchange. Coinbase makes it easy to buy and sell bitcoin. Check it out here:

https://coinbase.com/join/gochwv

 

Disclaimer: I may receive a small commission if you sign up for coinbase.

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Risk and Reward

Investing risk and Reward

Written by R. A. Stewart

Weighing up the risks and rewards of various investments is doing your due diligence which is the responsibility of every investor.

There is no shortage of choice for investors to get involved with but it is a matter of choosing the ones which are right for your personal circumstances and goals.

Here are my personal views of some of the types of investments available:

High interest accounts with Finance companies

If a company is offering you an investment offering you a high interest; it can only mean that they are also charging high interest to their borrowers and the reason why some people are prepared to pay a higher rate of interest is because they have been turned down by a bank. This could only mean one thing. “These are people who are at a higher risk of defaulting on their loans.”

During the Global Financial Crisis of 2007-2008. Several finance companies in New Zealand went into liquidation. Prior to this some financial commentators warned people that the high interest rates being offered by these companies does not reflect the risk they are taking.

Investing in Gold through an online investing platform

Investors are able to invest in gold through the internet via apps similar to Sharesies, Hatch, and Robinhood but is this a safe way to invest?

I am not so sure because the problem with gold is that it provides no income, therefore investors are relying on capital gains to make money. 

It is the transaction fees which could kill off any likelihood of profit, however, having said that, this is a good way to get involved in gold as an interest for a modest outlay. Just make sure you only use money which you would class as discretionary spending money.

Investing in Bitcoin

Is investing in Bitcoin a safe investment?

My answer to this is that nothing is 100% guaranteed, Bitcoin is a volatile investment. If you are prepared to ride out the lows then you can make capital gains for you. 

It is not a substitute for your retirement fund and under no circumstances should you invest your entire life savings in bitcoin. The same is applicable to the share market and gold.

If you have discretionary spending money then using it to invest in Bitcoin is the way to go and who knows, you may become the next Bitcoin millionaire.

There are risks with Bitcoin but if you use your common sense and learn as much about the risks as you can then you can reduce your chances of making choices which can be costly.

Investors have so many options to invest these days but there comes the risk of losing due to an economic downfall therefore, it pays to be on the conservative side. That is to diversify and spread your money around. 

About this article

This article is of the experience and opinion of the writer and may not be applicable to your personal circumstances therefore discretion is advised. You may use this article as content for your blog.website or ebook.

Read my other articles on www.robertastewart.com

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Cost of living crisis affecting retirement savings

Cost of living crisis affecting retirement savings

Written by R. A. Stewart

Thousands of New Zealanders have suspended contributions to their retirement fund due to the cost of living crisis and this will affect them when their retirement comes around.

New Zealand financial adviser Carissa Fairbrother advised people to keep sowing into your kiwisaver whatever your financial circumstances. Look at where else you can make cutbacks because not investing into your Kiwisaver will affect you when you retire.

Kiwisaver is New Zealand’s retirement scheme; it is voluntary, unlike the retirement schemes of other countries which are mandatory.

There is a $520 tax credit per annum for contributions to Kiwisaver but to obtain this investors will need to deposit a minimum of $1040 every year. This is just like getting 50% interest on your money for the first year the money is deposited.

Anyone who is a New Zealand resident can join kiwisaver. There is no upper or lower age limit. People under the age of eighteen or sixty five and over are not eligible for the $520 per year tax credits. It is still a good idea to join kiwisaver despite this for several reasons.

The $520 tax credits or government incentives as they are sometimes called is paid out in July into your Kiwisaver. If you contributed less than $1,040 during the previous year then you will receive 50% of your contributions.

The Kiwisaver year begins on July 1 and ends on June 30. It makes sense to check your contributions during the year and to make sure that you deposited at least $1040 by June 30.

One is it will give the young ones a good start to life as far as savings are concerned and it will also give them a good education in finances. 

For those aged 65 and over, it is still a good idea to keep contributing to your kiwisaver if you are not going to be using it in the short term.

Buying your first home

If you are purchasing your first home you may be able to use some of your kiwisaver for a deposit. It is all the more reason to start saving as early as possible as it will enable you to reach your goals quicker.

There are other circumstances where you may be able to access your Kiwisaver early. These are if you have a terminal illness, you are moving overseas permanently, or due to financial hardship. There are lots of hoops to jump through before you can access your money.

It is all the more important to have a rainy day fund when everything is going well for you and not just fritter away your discretionary spending money because things do go wrong in life.

It is never too late to join Kiwisaver, you can still join even if you are 65, though you are not eligible for the government incentives. It is still worth your while joining. It is a good way to play the share market.

You are never too young to join kiwisaver. You may not be eligible for the government incentives until you are 18 but joining early then having family members make contributions while you are still at school will give you a good financial platform for the future. Who knows, a rich uncle may leave you a sum of money in his will to be deposited into your kiwisaver.

About this article

This article is of the experience and opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use part or all of this article as content for your ebook, website, or blog.

www.robertastewart.com

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5 Factors which determine your risk profile

Factors which determine your Risk Profile:

Written by R. A. Stewart

Your risk profile is the amount of risk you are advised to take with your investments. There are many factors which determine your risk profile with the main one being whether the money you are investing is needed in the short term, medium term, or long term. 

Short term is when you need the money within 12 months

Medium Term is when you need the money within 5 years

Long term is when you need the money in more than five years time

Here are the main factors in determining your risk factor:

Factor 1: Your age

Young people have one thing in their favour which the older ones don’t have and that is time. The young ones have more time to recover from financial setbacks such as a share market crash, a job loss, or whatever, therefore are about to invest in growth funds which can be volatile. Older people need to be a little more conservative. New Zealand financial advisor Frances Cook has a formula for working out what percentage of your portfolio should be in shares; it is this: subtract your age from 100. Even if you are in your twenties that does not mean you should be reckless with your money and invest into some kind of risky venture. 

Factor 2:Your health

Your health is a major factor in determining your risk factor. If you have a health condition which requires or may require expensive medical treatment in the future then investing in growth funds may not be your best option because you do not want to lose your money just when you need it. This does not mean that you should not invest anything in growth funds but just not most of it. It may be a good idea to set up a bank account for those medical bills.

Factor 3: Your Personal Circumstances

Your own personal circumstances need to be taken into account. If you are single with no commitments then you will be able to take more risks with your money than someone who is married with children.

Factor 4: Your Debts

Your debts are a big factor in what you should do with your money. There is no point in investing your money at 5% interest when you are paying 15% interest on your loans. People with debts have a responsibility to pay off their own debts and need to prioritise that before turning their attention to investing. 

Factor 5: Your Temperament

Your temperament is a factor. If you are going to lose sleep at the thought of losing your money; something which can happen if you are investing in the share market, then going for more conservative funds is better for you but when it comes to long term investing such as your retirement fund then investing too conservatively will mean that you will likely end up with a lot less money in the kitty when you retire.

About this article

This article is of the opinion of the writer and may not be applicable to your own personal circumstances, therefore discretion is advised.

You may use this article as content for your blog or ebook. Feel free to share this article with others.

www.robertastewart.com

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Book Review-Your Money, Your Future

Written by R. A. Stewart

There are a number of books on personal finance on the market and one of these is “Your Money, Your Future by New Zealand financial advisor Frances Cook. In this book Frances provides practical advice and tips on managing your finances and how to formulate a strategy for achieving financial independence. There is no size fits all when it comes to designing a life and Frances makes allowances for that. Here are some interesting points from the book which I want to share in this article.

  1. To calculate what percentage of your money should be invested in shares, deduct your age from 100. For example; if your age is 65 then 35% of your money should be in shares. I think that the majority of investors probably have a higher percentage of their money in shares than this formula suggests. It is really a case of your timeline as far as when you are going to use the money.
  2. Putting your money into a savings account may feel safe to some people but over a period of time that money is losing it’s value because of inflation. Your money has to outpace inflation and it won’t do that in a savings account. Only your emergency cash fund should be kept in a savings account and money used for utilities and everyday living costs.
  3. The rule of 72 explains how quickly you can double your money. It goes like this; simply divide 72 by the average rate of return on any investment. If the average return is 7% then it will take you 10 years to double your money (72 divide by 7).

This is the magic of compounding interest. This is all assuming that you do not take your profits but rather allow them to be added to the principal so that you are earning interest on interest.

  1. You cannot beat the market so buy the whole thing! Frances talks about diversification here and explains how this approach beats trying to time the market every time. There is a saying, “Its time and not timing which is the key to making money on the share market.”
  2. Retire to something not from something. Frances points out that life needs to have a purpose otherwise it will be meaningless. You have to have an end goal in sight for when you finish work. Your retirement plan does not have to involve spending, it could be spending more time with the family or gardening.

You may be able to find the book, “Your Money, Your Future” by Frances Cook on Ebay or Amazon if you live outside of New Zealand. In New Zealand, the Trademe auction site may have copies.

I have read a lot of books on investing and this one is one of the best. It contains several gems of advice relating to personal finance. Whatever your personal circumstances are, you will find this book helpful in pointing you in the right direction.

www.robertastewart.com

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5 Ways to Diversify your investments

5 Ways to Diversify your investments

To have a diverse portfolio means to have your money in several places so that if one company or industry is in trouble then income from your other investments should at least minimise the shock.

There are 5 ways to diversify your portfolio. 

Number 1: Invest in several industries

Investing in different kinds of industries protects you from a downturn in one. With the online share market platforms I am with I have investments in a building company, an energy company, a farming retailer, phone company, and a New Zealand milk supplier. This diversification technique minimizes risks and gives me plenty of interest too.

Number 2: Invest in several funds

If you invest in managed funds and that includes everyone who is in Kiwisaver then you will be in various types of funds; growth, balanced, or conservative. The best strategy is to invest in the fund which is right for you and that depends on how soon you need the money. Long term, medium term, and short term money should be in growth, balanced, and conservative funds respectively but it all depends on your risk profile.

Number 3: Invest in different platforms

Most of us have heard of the online investing platforms such as Sharesies, Hatch, Investnow, Kernel Wealth, and Robinhood. Investing in several different platforms will help cushion you against the shock of having one of them fail, and certainly, there is no guarantee that this will not happen. I advise not investing all of your life savings into one online platform.

Number 4: Invest in different asset classes

Investing in different types of asset classes will enable you to withstand a downturn in one class of asset. Investing in fixed term interest, the share market, gold, and property are all different types of assets. It all depends on what the right kind of assets are right for your kind of personal circumstances. 

Number 5:Invest in different companies

This is very important. It is unlikely that all of the companies will fail even though the industry is going through a bad patch. This rule is just as applicable to investing in finance companies for a fixed term return as it is for shares. 

Benefits of Diversification

The number one benefit of diversification is it reduces your portfolio risk. If you placed all of your eggs in the one basket then you could lose it all if that one company went under and it did happen to some investors during the 2008 Global Financial Crisis (GFC) and 1987 Sharemarket crash (Black Monday).

It can be enjoyable for investors to own a little bit of a number of countries. Micro investment platforms such as Sharesies, Hatch, and Robinhood make this affordable for Mum and Dad investors.

Downsides of Diversification

Diversification can be time consuming but then everything worth doing is worth doing well. Investing in managed funds or mutual funds as they are called in the US is an option for busy people. More transaction fees and commissions is another downside to diversification and that could reduce your short term gain.

About this article: This article is of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised.

 

Sharesies is an accessible and straightforward way to invest in the stock market. You can get started on your investment journey and start building your wealth. However, before making any investment decisions, it is essential to do your research and seek professional advice if necessary.

 Join Sharesies here

Disclaimer: I may receive a small commission if you sign up with Sharesies.

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Entry-Level Job: 4 Must-Know Tips

Entry-Level Jobs 101: 4 Must-Know Tips

For most people, aiming for a higher position at once is the key to job search success. However, for some people who know that in order to succeed in the job market, they have to, literally, start from scratch. This means that people who want to grow positively in the working world; they have to learn the basics and fundamental principles of working, how it is to love the work most people do, and how to establish a good working relationship with his or her colleagues.

 

In order to enjoy all of these, one must submit himself or herself to an entry-level type of job. This refers to a job that requires minimal skills and expertise with no experience requirement needed. 

 

Because of its nature, entry-level jobs are characterized by low salary, require physical work, and sometimes need field work.

 

Most often than not, people who are into entry-level jobs have very low hourly rates and may or may not entail insurance. This would mean that any hospital expenses caused by accidents that happened while the worker is at work may or may not be compensated by the employer, meaning there is no guarantee or whatsoever.

 

What’s more, most entry-level jobs are on a part-time basis. Examples of entry-level jobs are receptionist, apprenticeship, those who are working in a fast food restaurant, customer service, cashiers, etc.

 

Contrary to popular belief, entry-level jobs should not be ignored.  What people do not realize is that entry-level jobs offer more than just low wages. These jobs are the foundation of all other positions available in the job market.

 

In most cases, people who start to work on higher positions right after they graduate from college are easily bored from their work. What is even worse, there is no room available for personal growth and career advancement.

 

Entry-level jobs are the stepping-stone to success in careers. So, for people who wish to grow and be promoted to a higher position, here are some tips that they can use:

 

  1. Workers who are in the entry-level position should show enthusiasm, efficiency, caring, and love for his work.

 

  1. They should master their skills and hone their craft.

 

  1. They should be an expert on customer service.

 

  1. They should know how to impress a customer who happens to be seeking an employee who knows optimum customer service.

 

These are just a few of the qualities that must be employed by an entry-level worker in order to advance to a higher position. And once he reaches the top, he knows that work is definitely something worth valuing for.

Your resume or CV can be the difference between getting the job you want or having your application ignored. If you need help with writing out your resume then check this out