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Timing the Market

Would you have been much better off if you had timed it just right?
2022 has not been a good experience for investors with some commentators saying that the first six months of the year has been the worst six month period for at least 50 years.
A little over 5% of the funds in New Zealand have shown a positive return during the six months to June 2022 according to research house Morningstar but what we do not know is what type of fund this 5% had invested in because it is almost certain that if they had been invested in growth funds then they would have joined the other 95% of funds which have shown a negative return.
So are you able to time the market perfectly every time?
The short answer is “No.”
The reason why this is so is that the odds of getting it right every single time is stacked against you.
If there was a method of timing the market perfectly every time then someone would have discovered it by now and you can guarantee that they are not going to share their secret with everyone.
we all have an opinion of some kind n what the markets will do; at the end of the day the markets are driven by market sentiment.
One cannot expect to be an expert on the markets overnight; it is no different to being knowledgeable about anything else. It all takes time and a bit of reading but knowledge does not involve just reading and listening; it involves doing. That is, investing; there is no better teacher than your own personal experience.
Warren Buffett recommends against obsessing over finding a perfect time to buy a stock.
“Don’t worry about what the market is doing or might do, or what the economy is going to do,” says Buffet. “Instead, think about the things you can control. Why am I investing? When do I need to use the money? Then set up an investment plan for your personal circumstances-because your goals can’t wait, but emotive headlines can.”
There is no doubt that investors jump on a bandwagon when a particular stock is rising.
The market is driven by emotion but whether a particular stock will rise or fall is not the only consideration. There is the matter of taxation. If stocks are held for a short period then sold your tax status may have changed to a trader but this area is a bit murky. A capital gains tax is in force in some countries so some of your gains could be reduced by a tax liability.

from time to time you might read of stories of investors who made a killing by timing the market just right but you never hear of the occasions of when these same investors who tried the same thing since and got their fingers burned. Greed eventually gets the better of speculators.
Timing the market correctly can sometimes be down to luck and that’s something to keep in mind if you see an advert from some guru who made a one time killing. Anyone can achieve a one off success but it is doing it consistently which is the problem. It is for this reason why spreading your investment among various forms of assets is the best way forward.
ABOUT THIS ARTICLE
You may use this article as content for your ebook or website. Feel free to share this post on social media.
www.robertastewart.com
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5 things you should never borrow money for

5 things you should never borrow money for

Written by R. A. Stewart

Holiday Travel

This is a complete no no because once your holiday is over you have nothing to show for the money which has been spent on it. Before overseas travel is considered it is important to think where in the scheme of this could that money be better spent as far as your goals are concerned. Other debts such as a mortgage, car repayments, and hire purchase repayments must all take priority and this is where any surplus cash should go. To go on holiday while having these debts hanging over your head is completely irresponsible. If this is you then you are heading for financial hardship.

Cryptocurrency

I have said it many times previously; “Only purchase cryptocurrency with your discretionary spending money.” In other words, money which you can fully afford to lose. Money which is set aside for household bills such as the rent/rates money or power should not be used for purchasing cryptocurrency. If you bought bitcoin and lost it all, would that cause you undue hardship? is the question which will determine whether you should go ahead with your purchase. It is also worth remembering that cryptocurrency wallets can be hacked and you can also lose money this way. It is also a good idea to point out that investing in cryptocurrency should never be a substitute for investing in your country’s retirement scheme but rather is something treated separately.

Electronics (TV, Laptop, etc)

There are items which are classed as needs and wants. Needs are things such as rent, power, food and grocery items, car expenses, etc. Wants are luxury items which should only be bought with discretionary spending money. Borrowing money for household goods is called consumer debt. You are borrowing money for items which lose their value over time. If you are borrowing money to pay for your needs then there is something seriously wrong with your household balance sheet and making an appointment with a budget advisor is the first step toward getting back into the black.

Furniture

As with other consumables you should never borrow money for household furniture. It is better to pick up cheap stuff from a charity shop than to go into debt for the sake of impressing your peers with nice stuff which is what you are basically doing. Some folk are so focused on accumulating stuff rather than accumulating assets that they never get around to achieving any kind of financial success because there is always something they want to buy. Once something is paid off they look for something else to buy on credit. It becomes a never ending cycle of debt and in the long term all of the interest payments add up to a huge sum of money.

Pets

An absurd amount of money is spent by some pet owners per annum; namely dogs and cats. It is one thing spending your discretionary money on your hobbies and pet ownership is one, but it is another to use borrowed money to pay for it all. I have seen some people spend a lot of money on vet bills for cats and dogs when the sensible thing to do would be to have the animal put down. I was told of someone who spent a grand on vet bills for a cat only for it to die a few weeks later. Now you have to think what would you have done with that kind of money? It could have been used to pay off a mortgage if you have one or some other debt, or have been invested into some mutual funds. 

We all have a choice to spend whatever discretionary income we have and each choice has different outcomes, therefore the trick is to invest your money into something which will give you the best kind of outcome for your personal circumstances.

www.robertastewart.com

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How to Motivate Yourself

How to Motivate Yourself

1-Put it in your calendar

One way to give a boost to your internal motivation is to create some external motivation; a target date. Whatever it is you’re aiming to accomplish, put it in your calendar. You may be working toward a goal with a fixed date built in. Examples include preparing for a test or taking a course with a fixed date.

The psychology of motivation:

https://uii.io/mGwa4

2-Make working toward your goal a habit

When you make working toward a goal a habit-an automatic conditional response-you no longer have to rely so much on feeling motivated. How do you turn a behavior into a habit?

How to stay motivated; check out this video:

https://uii.io/6jF3K85Tr

3-Plan for Imperfection

It’s great to feel excited and confident about achieving your goal, but it’s also possible to be too optimistic. Not every day will go exactly as planned, and that’s okay. Life happens. One way to boost motivation on different days is simply to plan for them. As you think about your goal, jot down a list of things that could get in the way. 

4-Set Small Goals to Build Momentum

Research shows that frequent small successes can build momentum that can in turn drive long-term success, especially early in the process. Whatever your big goal may be, start by breaking it down into smaller chunks. Getting a new job might be a big goal. Smaller goals could be updating your resume, making a profitable portfolio website, earning a certificate or attending a networking event.

5-Track your progress

Seeing progress can be highly motivating. You’ll find highly motivating tools out there or days to help you with your goals. This could be as a to-do list or calendar where you can cross off tasks or days to complete them, or you can opt for a free tool like trello which helps you to create a personalized digital tool .

How to Motivate Yourself; Check out this video:

https://uii.io/sP9aUYrkrt

#motivation #howtomotivateyourself #motivate #howto

www.robertastewart.com

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How to Finance Books Book Review

How to Finance Books Book Review

Your Money Your Future by Frances Cook

There are some very good financial how-to books written by New Zealand authors which are a good read. If you come from a country outside of New Zealand then maybe you can find these listed on Ebay. You will almost certainly find these listed on the New Zealand auction site trademe. One such author whose books are worth reading is Frances Cook.

Frances is a top-rated pod caster and personal finance journalist. Her book, YOUR MONEY YOUR FUTURE is worth a good read. “The best time to plant a tree was twenty years ago. The second best time is now.” according to Frances. The book contains practical advice which anyone can use to achieve better financial outcomes.

There are several interesting points made by the author; some interesting ones being:

The 4 percent rule

This is how much you can spend on your savings per annum after you retire from working.

Income – expenses = savings

You just need to create a gap between your income and your expenses whichever way suits you, in order to save money; “a very simple equation”says Cook.

Chapter nine is titled, “To understand money, think of it as time.” The more time you have on your side, the more you want to invest in risky assets. It is not risk such as investing in a new cryptocurrency which may make you a packet one year only to lose it the next. Everything comes down to time. It is the key to unlocking the key to what you do and when. Older people need more cash on hand, because they’re in the spending phase of life.

Debt was another topic covered. “Spending money you don’t have is called debt”, says Ms Cook. “It is a monkey on your back. Your debt is standing between you and a better savings rate. The money you can’t have today as a debtor has to pay for the life you lived in the past. The debt needs to go first so that the future doesn’t keep being held back.”

Without knowing your personal situation I believe that even if you are in debt it is still important to contribute to your country’s retirement scheme in order to take advantage of the incentives your government provides, not to mention the captain gains on your money but it is a balancing act and as Frances Cook points out. Debt is a hindrance to your financial well-being and has to go beginning with the debt which you are paying the most interest on.

increasing your income through side hustling is covered. One piece of advice given is to look at other industries and see if you can adopt and repurpose the idea to your own area.

Also covered in the book is retirement and Frances says “You are either retiring from something or retiring to something.”

What do you do with your life if you don’t need your job anymore? It might be volunteering for a charity or community group. If you focus on retiring from something, you focus on what you are leaving behind. If you’re retiring to something instead, you have an end goal in sight. You may have a business you want to launch in an area of your passion. You are creating a life, not just quitting the one you currently have. If all you are focusing on is retirement from the life you had then you will find life very empty afterwards.

Frances Cook really puts things into perspective and asks a few hard questions. At the end of the day, a book such as this, may have a lot of useful snippets of information but it really is up to each individual to establish what their personal goals are and incorporate ideas from the book which are appropriate to your situation.

www.robertastewart.com

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Mistakes made by ordinary investors

If you have money invested in your country’s retirement plan then you are an investor whether you know anything about the markets or not. Chances are you have your money invested in some kind of mutual fund which is managed by a fund manager who invests on your behalf. It is up to you to decide on which fund to invest in and for how long.

1-Too Conservative

You have got to learn how to be an investor and take calculated risks; there are no two ways about it. You can manage these risks to take into consideration your age, goals, and your timeline. If you have your money in conservative funds and you are in your twenties then your retirement fund will fall far short of where it is likely to be when you retire. Investing in growth funds is all about achieving capital gains. 

2-Too inconsistent

Lack of consistency as far as contributing to your retirement fund will cost you in the long run. It is easy to be consistent in your contributions when the share market is going strong but it is when the markets are bearish that you need to motivate yourself to keep investing because during the low points is when there are bargains in the share market. If you are working in some type of job then a percentage of your gross wages will be deducted and deposited into your kiwisaver account.

3-Too Emotional

Fear and greed is what drives the share market is an old cliche which rings true. Many investors react to the market’s swings and roundabouts and sell when they should hang on to their stocks. Investing in the share market is a long term game; it is not a sprint, it is a marathon. If you have some kind of retirement fund then your fund manager invests on your behalf, however if you are in New Zealand you are able to switch funds which some investors do in reaction to what the market is doing. If you have some kind of financial goals then this should take into consideration a possible share market crash.

4-Too Greedy

Many investors are simply too greedy; they invest in something offering high returns without paying any attention to the risk they are taking on, or worse still, they place all of their eggs in one basket hoping to make a killing. This all or nothing approach has destroyed several retirement plans. This was certainly the case when several investors saw their life savings disappear with the collapse of several finance companies. Diversification minimizes your risk.

5-Too Impatient

Patience is the name of the game in investing. It is time and not timing which will build your retirement riches. There will be ups and downs in the markets but a bit of patience will pay off in the long run. Something some people do not have so they invest in risky stuff offering quick returns and end up losing more often than not. 

6-Too Gullible

There are offers or as they are called “opportunities,”promoted online mostly and sometimes in the print media as a way of making quick profits. If an investment seems too good to be true then it mostly certainly is. Usually the person or company promoted such offers are the ones making money out of it. You may have read stories about the amount of money such people have made from whatever it is being promoted but they are in the minority. 

It is up to investors to take responsibility for their own decisions and not try to find a scapegoat if things turn to custard.

www.robertastewart.com

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Will Bitcoin recover?

Will Bitcoin recover?

That is a question  nobody knows  the answer to. I think anyone who claims otherwise is really deceiving themselves. The problem with predicting what may happen with the movement of bitcoin is its short history which is insufficient data to make an informed prediction. Unlike the share market which has a long history. Financial experts can look at what has happened in the share market and tell you how quickly or slowly the market has recovered after a crash. When we concern ourselves with Bitcoin we are heading into unknown territory.

There are some financial analysts who are game enough to make a prediction on which direction bitcoin will go. Some are even predicting that the price of bitcoin will reach 75,000-100,000 by the end of 2022. Whether this is pie in the sky stuff we will find out; it all depends on who you listen to. As always, look at a person’s credentials before considering taking anyone’s advice. How well do they know the world of cryptocurrency?

Bitcoin has lost two thirds of its value since it reached its record high of $68,000 US last November. Ethereum is worth just a quarter of its record high of $4700 US.

Investors have been looking for alternatives to cryptocurrency in favor of less volatile investments.

Will bitcoin recover?

One expert says it could take a few months or a few years to recover. Another expert says he expects short term volatility and long term growth.

One reason for the downward spiral of cryptocurrencies has been the involvement of institutions which are sensitive to the availability of capital. This has been the major factor in the correlation between Bitcoin and equities.

Cryptocurrencies have not been helped by bad publicity which have had the same effect as bad publicity has on the share market.

Another expert who showed graphs explained that Bitcoin doubled in price the following year after it halved in price and says recovery is not expected before 2023. He says that he expected the next peak in Bitcoin to be after 2024. The next peak is expected to be in November/December 2025 if previous high/low/high patterns continue.

Bitcoin may have a short history but patterns are still emerging which investors can consider when deciding whether to invest in Bitcoin. The important thing to remember is that you should use only your discretionary spending money for purchasing cryptocurrency.

Another thing you should keep in mind is that when there is an opportunity to make a capital gain whether that be from cryptocurrency, gold, or the share market then there is also the chance of a capital loss.

ABOUT THIS ARTICLE

The article is of the writer’s own opinion and experience and may not necessarily be applicable to your own circumstances. If you require qualified financial advice see your financial advisor or bank manager. Feel free to share this article. You may use the article as content for your ebook or website. Check out my other articles on www.robertastewart.com

If you are still keen on having a go with bitcoin then  check out this site:

https://blockfi.com/?ref=9dc42263

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Is Kiwisaver for KIds a Good Idea?

Is Kiwisaver for KIds a Good Idea?

Written by R. A. Stewart

Is it a good idea for parents to open a kiwisaver account for kids? 

That is a question I have been pondering because a lassie who writes to me has a three year old son. Here are the pros and cons I considered.

The pros

1 It will give the kid a good start in life as the money can be used for a deposit on their first home.

2 The markets are down which means that there are bargains in the share market.

3 It will help give the kids a tolerance to risk

4 It will help develop their financial literacy

The cons

1 Kids are ineligible for the kiwisaver incentives until the reach the age of 18

2 Money in locked into kiwisaver until they reach the retirement age of 65

3 There are other alternatives

After considering all of this I decided that getting children signed up to kiwisaver in order to help them get their first home is a good idea, however, it is worth noting that if he or she inherits Mum or Dad’s home then they are not eligible to withdraw any of their kiwisaver funds to purchase their first home. Having some form of goal and a route for getting there is better than not having any kind of plan. A plan such as this gives children an option when they are older. I cannot think of any circumstance when any adults may have regrets that their parents enrolled them into Kiwisaver.

It is important to choose your fund and not change because a fund which is on a high will come down while a fund which is low will rise; that is the nature of the markets. Just focus on contributing to kiwisaver both for yourself and your children.

Another important thing to remember is the importance of having a will because if you die without a will then it is likely that lawyers will take a good piece of your kiwisaver if there is a dispute over who gets what. In any will disputes, the person’s spouse will inherit everything, if they are not married then it is their children, if they are not married and have no children then it is their parents and if their parents are deceased then their siblings are next in line. This is of course if the person has no will.

Of course one may argue that due to the high cost of living that it is difficult for them to make ends meet let alone contribute to their own kiwisaver and their childrens as well. If this is true for you then you should make a plan to increase your income or decrease your spending. A combination of both is ideal. Think about this if you saved $5 per week, that is $260 per year. In 10 years that is $2,500 years. $10 per week is $520 per year. 

ABOUT THIS ARTICLE

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

www.robertastewart.com

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Now is a good time to join kiwisaver if you have not already

Now is a good time to join kiwisaver if you have not already

Written by R. A. Stewart

It is a good time to join kiwisaver if you are young and just starting out in the world. If you are over 30 and have not already joined kiwisaver then why not? Kiwisaver is the New Zealand retirement scheme. If you are in work you will get the equivalent of 3% of your gross wages from your employer deposited into your kiwisaver account. 2%, 4%, or 8% (you choose) of your gross wages will be deposited into kiwisaver and deducted from your pay. You can also make voluntary contributions to your kiwisaver account. This is an option used by those who are self employed or not in work.

The government’s contribution to your kiwisaver is what makes this a no-brainer. You will receive $520 of government money into your kiwisaver account but you need to invest at least $1040 to receive the full $520 otherwise the government contribution is 50% of your contribution. This is per annum; in other words you need to invest at least $1040 into your kiwisaver account per annum to receive $520 of government money every year.

The Kiwisaver year begins on July 1 and ends June 30 the following year. If you are on part time work and it looks as though your kiwisaver contributions are going to be less than $1040, you can make voluntary contributions to ensure your own contributions reach $1040.

In order to take advantage of the falling share prices you need to be in a growth fund or have some portion of your portfolio in a growth fund, otherwise called a balanced fund. If you are in a conservative fund then you are going to miss out on the market rebound. Financial experts will tell you that if you are in a growth fund then you need to leave it invested for at least five years. That way, if the market falls during this time there will be time for it to recover and recoup any losses which it has to be said are only paper losses.

Money which is needed for the short term such as a holiday abroad next year is considered short to medium term money. If you had this money invested in a growth fund you may find that your spending money for your trip has been depleted therefore, to reduce this from happening investing in something less risky is an option taken by a lot of holidaymakers even though the return on this money is less than the inflation rate.

If you are prepared to take the risk then you might consider investing your short term money in growth funds in the hope of increasing your capital but it is important to understand that whenever there is an opportunity for capital gain then there is a chance for capital loss.

It cannot be stressed enough that it takes a cool head to live through the ups and downs of the sharemarket and be relaxed about it. One thing you can always bank on is that the sharemarket will go up and down. It is important to have a strategy in place to take this into account.

Diversification minimizes your risk. Diversification is when you spread your investment among several companies. One company might fall over but not the whole lot.

Some may argue that if you plunge all your money in one stock then you will make a killing; that is true, but you never hear of those who tried that and lost. If you are going to do that then it should be done independently of your main investments rather than risk your retirement savings going down the drain.

ABOUT THIS ARTICLE

The information in this article is of the writer’s own opinion and may not necessarily apply to your personal circumstances. You are advised to seek professional financial advice if you require assistance. You may use this article as content for your ebook or website. Check out my other articles on www.robertastewart.com

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New Zealand women taken in by tinder scams

Millions of dollars are lost by New Zealand women every year to online tinder scammers who operate from overseas.

The Press reported that two women were conned into handing over more than $500,000 (NZ) to the scammers.

The scams involved fake banks, emails, and videos. Police investigators say that scammers are targeting multiple victims at once. They say the scammers are using the same photo and profile in their interaction with different victims. They also used the same sad story about their fraudulent background. 

Those who carry out these scams are experts at what they do. These scammers are present on most dating websites. The conversation is that these often moved from the reputable dating site to Whatsapp.

Another common theme in the scams is that the scammer quickly professes their love for the victim telling them they are working overseas and also that they come from a wealthy background.

Once these scammers gain your trust they will assist you.

There are some red flags to note with dating scammers.

(a) They come up with all kinds of excuses why they are unable to meet you.

(b) They are located in out of the way places such as an oil rig.

(c) There is always a sad story to tell their victims.

Scammers play on their victim’s emotions. What lady does not want to be fussed about? Some women will be so taken by what they think is a new man in their life that they ignore all of the red flags. As the saying goes, “Love is blind.” But their fantasy becomes a nightmare as their new found friend disappears as quickly as their money.

It is up to everyone to do their due diligence. Here are other red flags to note:

(d) The other person wants to hasten the relationship

(c) In the first message,  your prospective date says, “age, nationality, and gender is immaterial.”

(d) Your potential date claims that they are christian but the contents of their correspondence does not line up with christian values.

(d) Their profile photos have left little to the imagination.

Check out this link to a recommended dating site:

Find your date here

www.robertastewart.com

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Who do you turn to for advice during the market slump?

Written by R. A. Stewart

There is advice flowing in all directions on the best way to manage your finances during the market downturn. Who do you turn to for advice? Well, for a start, it is up to each individual to take responsibility for their finances and do their own due diligence. The possibility of a share market crash should have been factored into your plans. How often has it been said that your age and tolerance to risk are two factors that determine where to invest your money. If you are in your 20s then the market slump should not be an issue for you as far as your retirement savings are concerned because you have the advantage of time on your side. It is a different story, however, if you are saving for a house deposit. If this is the case then your money should be in more conservative funds but it all depends on how soon you need the money to purchase a house.

Eight years ago I was doing a mystery shopping assignment for a kiwisaver scheme and was advised to scale back to more conservative funds because of my age. I did not do that but if I did I would have missed out on the gains which occurred during that time. My kiwisaver balance would have been a lot lower than it is even during the current slump.

Personally, I am prepared to just weather the storm. How long this will last, who knows?

There was a financial advisor on TV one night saying, “People need to invest money at a higher rate than the inflation rate,” but she didn’t specify where we are supposed to find such an investment since the inflation rate is higher than fixed term interest rates.

Another financial advisor on TV said “Investors need to think about where they will be in ten years time rather than ten minutes time.” He said, “Investing in the share market is a long term game.”

Investors may be tempted to invest in something offering high interest rates. It is worth reminding people that during the Global Financial Crisis of 2007 and 2008 several finance companies went bust leaving a lot of investors out of pocket. In fact some investors lost their entire life savings in some of the company collapses.

A young woman was interviewed on TV last week and she told the reporter that she was in a conservative fund (in Kiwisaver). She wasn’t concerned about the tumbling markets. She was oblivious to the fact that she had missed out on all of the gains which the share market had made over the years and she will miss out on future gains in the markets because it is a good time to invest in the markets right now and this particularly applies to the young ones. The reason why it is a good time to invest is because you will get more units for your money. 

If you are saving for something for the short to long term then it is better to have your money in more conservative funds. These are decisions that need to be made by each individual and not others. It is about taking full responsibility for the outcome and not blaming others.

Disclaimer: This article is based on the writer’s opinion and experience and may not be applicable to your situation. If you require qualified financial assistance then see your bank, financial, or budget advisor. You may use this article as content for your ebook. Check out my other articles on www.robertastewart.com