October 2018 – Personal Finance

October 29, 2018

STORY OF THE DONKEY

The moral of this story?

There was an old man, his grandson leading a donkey to town and while they were on their way they came across someone who said to them;

“Why don’t you both just ride the donkey? It will save your legs.”

So the old man and his grandson both got on the donkey’s back and continued on their way but further down the road, some one said;

“Hey look at those two people sitting on the poor donkey. Someone should report therm to the S.P.C.A.” (Society for the prevention of cruelty to animals)

So the grandson said to his grandad, “I will get off and lead the donkey and you can ride it.”

But further down the road, a passerby saw this and said, “Thats not good, the poor lad walking while the old man is riding the donkey, I should report the man to C.Y.F.S.” (Child, youth, and family)

So the old man got off the donkey and told the lad to hop on the donkey’s back but further down the road someone saw this and said, “Look at that, an old man walking while the boy is sitting on the donkey.” “The young these days.” that person said.

So the old man got off the donkey and both the old man and his grandson walked along the road leading the donkey as they had done so as the originally set off on their journey.

What is the moral of this story? Other people can take away your power to think for yourself if you allow them to. Everyone has choices that they have and it is up to their discernment to make the right choices. Unfortunately there are some people who think that your life should be a carbon copy of theirs and cannot accept other people’s point of view especially if it differs from theirs. Family members can be the worst offenders in this regard.

Then there are those who don’t want to make their own choices for fear of making a wrong choice for fear of making a mistake so what they do is ask someone for their opinion on something hoping that it will line up with what they want and if they are told what they want to hear they will have someone to blame.

www.robertastewart.com

October 25, 2018

Kiwisavers losing out.

Kiwisaver’s missing out of $thousands$

15% of those in kiwisaver are not making the most of kiwisaver and are missing out on thousands when it comes time to reap their harvest. That is because they are in default kiwisaver funds. What this means is that when you join the kiwisaver scheme you nominate which fund to join, growth, balance, or conservative but if you do not nominate wich fund to join then one will be chosen for you and that is always a conservative fund which has a return of 5% compared to 7%+ for other funds.

It is also important not to chop and change funds according to market conditions. Otherwise it can cost you in the long term.

The following table will give you an example of how much you could be missing out by not getting the most out of your savings.

Amount in kiwisaver 5% return 7% return

10,000 $500 $700

20,000 $1000 $1400

30,000 $1500 $2,100

40,000 $2000 $2,800

50,000 $2,500 $3,500

This difference takes place every single year so that by the time you reach retirement age the differences between how much you could have saved and how much you will actually get will be quite huge. There lies the beauty of compounding interest because your money has earned a return and this money is also working for you.

www.robertastewart.com

October 16, 2018

5-steps to setting goals

5-Steps to setting financial goals

Setting goals can motivate you and help you achieve your goals but before are able to set any goals you must know what you want. This is the first step to setting your goals. Unless you know where you want to go how are you going to know when you have arrived? It would be similar to purchasing a travel ticket without specifying a destination and of course the person at the travel agent will be unable to help you. Unless you know where you are going how will you ever know when you have arrived? The first step to setting goals is “Having goals.”

Step one-Knowing what you want

Knowing what you want or at least setting a goal to achieve something because it is something you think you want is all very fine but you have to know why you want to achieve something; in other words “What motivates you to want that something?” Before you can answer that question you really need to ask yourself this one “What gets you up in the morning?”

Step two-Knowing what motivates you

Knowing what you are capable of doing is an simple as giving it a go. People often short change themselves by setting goals that are not challenging. They stay close to their comfort zone and never venture away from their own well-worn beaten track and stay within their own self-imposed limitations. To achieve anything worthwhile means you have to take risks and that means you make mistakes occasionally but “He or she who never made a mistake never made anything.”

Step three-Knowing your capabilities

There will be lots of people willing to give you advice but you have a choice whether or not to accept it. Problem is there are so many people who will expect you be be a carbon copy of themselves. Such people will tell you what you can and cannot do and place limitations on you. Sadly, they will criticize you for not doing anything with your life and then once you come out of your shell they will be the first ones to point the finger at you for your mistakes. Best thing to do is spend less time with such people, there are kind people out there who will encourage you in your endeavors.

Step four-Knowing who to listen to

This sounds obvious but you must take action in order to get anywhere in life. Your life will not progress unless you take some type of action but this should be actions that lead to your objectives. Some folk make the mistake of taking actions which are not compatible with their goals and so after a while they have gone back into their old ways. If you have no vision then you will return to the past.

Step five-Take action

www.robertastewart.com

October 11, 2018

MESSAGE TO INVESTORS-“Don’t Panic.”

Important not to panic during sharemarket drop

It is important not to panic when the markets are falling as has been the case recently. Whether you have a grand or two in shares or have 1000s invested in the sharemarket, it is best to ride it out the storm and just let the markets bounce back in your favour as no doubt they will. That is if you had followed the basic rules of investing.

The most important rule is to never invest in the markets money which you cannot afford to lose. If you are saving for a house then the sharemarket is not the place to invest your money-you should instead go for more conservative investments. The worst thing that can happen if you had invested your house deposit money in the sharemarket is to find that the value of your investment is reduced when it comes time to withdrawing your money.

If on the other hand you were investing for your retirement then you can afford to take risks as this is a long term investment and you will be able to take advantage of the gains in the market which for decades have outweighed the falls. Some financial advisors would tell you to scale back to more conservative funds the closer you are to retirement but that all depends on how soon after retirement you actually need the money. This is particularly relevant for those with kiwisaver accounts (NZ retirement savings scheme). (Not necessarily applicable in your own country).

It is also important to diversify your investing so that your risk is spread out over several companies and industries. If you have the means to play the market directly then this is the most important rule to follow. It will help you to withstand a sharemarket down turn better because some companies fare better than others during an economic downturn.

This week’s sharemarket down turn is a timely reminder to exercise commonsense when investing money by not placing all of your eggs in the one basket and to ride out the storm.

This article is not intended as financial advice but rather is the sole opinion of the writer.

Bob

www.robertastewart.com

October 8, 2018October 8, 2018

Taking a punt on the Melbourne cup

Melbourne cup clues that count

There are quite a number of systems for selecting the Melbourne Cup winner using past statistics but in recent years winners of the famous race have taken random routes on their way to cup victory. There does not seem to be a set pattern as far as which leadup races to use as a guide to finding the winner of the Flemington’s famous race. Take a look at the recent winners and you will see what I mean;

2017 winner Rekindling’s last race before the Melbourne Cup was the English St Leger in September. He became the first horse since Irish raider Vintage Crop in 1993 to have won the race on his Australian debut. About 100 other horses had tried to emulate Vintage Crop’s success in winning the Melbourne Cup on their Australian debut since but none had suceeded prior to Rekindling although many had gone close to it. Many Melbourne Cup systems eliminate horses making their Australian debuts and therefore did not select the 2017 winner.

2016 winner Almandin had won the Bart Cummings Stakes on the first Saturday of October at his last race. I’m not sure what the race was called previously but whatever it was it has not featured as a leadup race in any previous Melbourne Cup winner since the 1980s, possibly longer than that.

2015 winner Prince of Penzance finished 2nd, beaten by half-a-length in the Moonee Valley Cup at his final outing prior to winning the Cup. The last time a Melbourne Cup winner started in the Moonee Valley Cup prior to their Melbourne Cup success was in the 1980s.

2014 winner Protectionist started in the Herbert Power Stakes at his previous start prior to winning the Flemington feature. The Herbert Power Stakes had not featured as a leadup race among Melbourne Cup winners since the 1980s, maybe longer than that.

Based on all of this, who knows which route this year’s Melbourne Cup winner will take so it would pay to focus only on those factors which count. One factor that seems to stay constant is that the majority of Melbourne Cup winners will be among the first 4-6 favourites and because the field is often quite open, you can get odds of around 5-1 on the favourite. Backing each-way may be the way to go as you will get a good each way price if your horse finishes second or third, even fourth if you are betting with the British bookies. The place portion of youer bet can save you if a longshot blows punters away as was the case in 2015 when 100-1 outsider Prince of Penzance was successful.

Many punters will get greedy and tery to win the trifecta or first four. The odds of winning one of these types of bets are stacked against punters, the huge dividends only mean that thousands of punters are putting their money into the pool with only a few taking out so my advice is to forget them.

I have an ebook with all of the stats + Melbourne Cup systems to try and you can purchase a copy here for just $10 NZ