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MAKING MONEY MADE SIMPLE

Book review

Making Money made simple

By R. A. Stewart

MAKING MONEY MADE SIMPLE

Written by Noel Whittaker, “Making Money made simple,” is a very informative book on finance. It is a very practical guide which covers all types of investments. 

In it Whittaker says people’s financial situation places them into one of three categories;

1-The Seriously challenged

2-Those who are reading water

3-Those needing direction

He describes the process of setting goals and taking action.

He also describes the rule of 72 which is to divide 72 into the annual rate of return. This will give you the number of years it will take to double your money.

He says the keys to prosperity, which are, 1. Spend less than you earn, 2. Take responsibility for your financial future up to and including retirement, 3. Avoid the traps that reduce your wealth, and 3. Get inertia working for you and not against you.

Also in the book Noel gives his thoughts about the various kinds of investments.

Other issues he talks about are Managed Funds, gold and silver, borrowing traps, buying a home, and gearing-speeding up the way to wealth.

As far as financial books go, this is up there with the best. 

www.robertastewart.com

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THE MONEY SCHOOL

Book review by R. A. Stewart

The Money School

THE MONEY SCHOOL 

written by Lacey Filipich is an interesting book which explains the advantages and disadvantages of the various types of investments available. Lacey founded Money School in 2010 (Australia) to build financial literacy in adults. There is also a course for kids to teach them money skills. Lacey’s courses have been used by people from around the world to improve the financial well-being.

If you…

Ever wondered where your hard earned money goes.

Want to be financially independent years before your time

How to make the most of what you have.

Then this book is for you.

Here are some subjects she deals with;

Saving money and living within your means which is basically pay yourself first.

Diversifying your investing

Buying assets and avoiding bad debt.

On Property and negative gearing she says tax advantages are a terrible reason to buy property because they are so minimal. Negative gearing is where you spend so much money renovating the property that you show a loss on it can be claimed against your other income. She rightly points out that governments can change the tax rules so that property investors cannot claim losses against other income.

As far as Bitcoin and the like are concerned she says you may want to invest the money you would have otherwise have spent on the horses or casino in bitcoin instead. She does concede though that no one knows where crypto currency will go considering it’s short history.

Other types of investments such as bonds, cash, and the sharemarket are also covered.

www.robertastewart.com

 

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THE TACTIC OF AVERAGING

This article is of the opinion of the writer and not intended as financial advice. If you require qualified finance advice see your bank manager, financial advisor, or budget advisor.

The Sharemarket-Averaging

Averaging in the sharemarket is when you purchase shares in a company and as the share price declines you purchase more shares in the company therefore reducing the average price paid per share.

Here is an example of how averaging would work.

Price Number amount Price per share Total average

$4.00 1000 $4000 $4.00 $4000 $4.00

$3.50 1000 $3500 $3.75 $7500 $3.75 

$3.00 1000 $3000 $3.50 $10500 $3.50

$2.50 1000 $2500 $3.25 $13000 $3.25

$2.00 1000 $2000 $3.00 $15000 $3.00 

In this example you began by purchasing 1000 shares at $4 per share but in a sliding market where the price in this companies shares have continued to slide, if you buy this company’s stock as it’s share price continues to fall, the average price you will have paid per stock will be reduced. This is called averaging.

This kind of strategy can be used in the cryptocurrency market but it should be pointed out that only money which you can afford to lose should be risked in Bitcoin.

Investing in gold or other precious metals is another form of capital gains which can form part of your wealth-building strategy, you can find more about it here:

https://affiliates.goldco.com/l/1VRW1MU2Q/

www.robertastewart.com

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RETIRE TO GREYMOUTH

Retire to Greymouth in New Zealand

Written by Robert A. Stewart

Where would you like to retire in New Zealand if you had the choice?

How about Greymouth on the South Island’s West Coast?

It is a town of some 10,000+ residents, Greymouth is the largest town on the West Coast. It has all of the facilities of similar sized towns and more.

The best part of Greymouth to go searching for a house are Karoro, South Beach, and Paroa. These areas don’t have the problem of crime as others, and are not as cold as the centre of town.

Cobden bears the brunt of the easterly wind roaring down the Grey River, Coal Creek and Kaiata suffer from flooding now and again, and Blaketown gets the faces the strong westerly winds.

As for public transport, Greymouth is well-served by taxis, which includes a service to Hokitika airport, 26 miles away.

If you are keen to travel further afield, Greymouth is the only town on the West Coast with a train station. The world famous Tranzalpine is among one of the best train journeys in the world. It has to be on your bucket list. The train leaves Greymouth at 2pm arriving in Christchurch at around 6pm. It leaves Christchurch at 8 in the morning.

There are daily bus services to Nelson and Christchurch. Check with the ladies at the train station for time tables and brochures.

So what is there to do in Greymouth?

Heaps if you are an outdoor person who enjoys fishing, hunting, tramping, cycling, and other outdoor activities. 

The West Coast has lots of cycle trails and bush walks for those who feel energetic. The newest one is the Blackball to Punakaiki track, named, “The Paparoa Track.” This is by no means the only one. Ask at your local tourist information Centre for further information on these.

The climate on the West Coast is mild compared to other parts of New Zealand. In August 2019, Greymouth had snow for the first time since 1995. It was a novelty for the locals. That does not mean that other parts of the West Coast does not receive snow. Otira on the Western side of the Southern Alps receives it’s share of snow every winter. In fact, roads between Christchurch and Greymouth can be impassable for those without chains during periods of heavy snowfall.

Some of the small communities outside of Greymouth possess their own unique charm which makes them ideal for the retirees. Runanga, five miles north of Greymouth, Omoto just east of Greymouth, and Taylorville are all nice spots. Seaside places such as Rapahoe and Punakaiki further up the road are prone to erosion and will continue to cause headaches for those who own properties in these areas. Thought you should be warned. 

Many of the high street retailers have a store in Greymouth; these include The Warehouse. Countdown Supermarket, Noel Leeming, Paper Plus, and others. The town has a wide range of cafes, restaurants, and fast foods outlets, while all of the major banks have a branch in the town.

WIFI is available throughout the town and there is FREE internet access at the public library.

Before making a commitment to retire to Greymouth it would pay to visit the town for a week or two to get the feel of the area. You won’t be disappointed.

There is an American magazine called “Retire,” it has articles on the best places around the world to retire. You can obtain a copy here:

: https://robertastewart.com/retire/

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ASSESSING RISK VERSUS REWARD

This article is of the opinion of the writer and does not constitute financial advice; if you require advice of a professional contact your financial advisor or bank manager.

Assessing Risk and Reward

Written by R. A. Stewart

Assessing the risk of loss compared to the rewards is a balancing act and requires a bit of insight and knowledge of what you are investing on. This issue has been brought to my attention a couple of times recently. It was only yesterday I received an email from a website which holds bitcoin funds; the email was promoting a special offer. Invest a minimum of $100 US into Ethereum for 4% interest. This was not an offer to purchase Ethereum itself but rather than purchase Cryptocurrency as a means of making Capital Gains you would be investing money for a guaranteed return of 4%. This is a poor return for the risk involved and of course I gave this one a miss but with the low interest rates at present there will be some people who will be tempted if offered this kind of investment.

Finance companies that offer investors higher returns to investors are lending their money to higher risk borrowers; therefore there is a greater risk of losing your money. Prior to several finance companies collapsing in New Zealand during the Global Financial Crisis of 2007/2008, many financial advisors were saying, “The higher interest rates do not reflect the higher risk investors are taking on.” 

Many rejected that advice with disastrous consequences.

Sports betting and horse racing provide perfect examples of risk and reward.

In the Australian Rugby League Melbourne Storm were playing Sydney Roosters. Melbourne has won almost two-thirds of their games since their formation in 1999, therefore if you backed them in every game you would need average odds of $1.50 (1-2) just to break even, yet they were paying $2.20 (5-4). This was over the odds.

In the same weekend, Brisbane Broncos, a team that had lost it’s last five games was favourite against the NZ Warriors. Brisbane were paying $1.60 which was a poor price for an out of form team; they lost.

It is the same with horse racing. If there are equal favourites with one that has won one race in 14 starts and another that has had two starts for one win then which would you prefer? The one that had only been beaten once is the better bet.

You have to do the mathematics and ask yourself this question, “If I backed this horse at all of it’s starts would I be in front with the odds it is paying in today’s race?”

Getting back to investing in the financial markets one has to assess the risk and weigh it up as opposed to the rewards.

One very important point to remember is this; “Whenever there is a possibility of capital gain then there is also the possibility of capital loss.”

Investors need to get used to losing occasionally and get into the habit of taking calculated risks. If you have not had any financial setbacks it means you are not taking risks.

Taking risks is not the same as making foolish financial decisions. Just be sensible with your investing and invest according to your plan and timeframe when you require the money. 

This is some guide;

Short term (with one year) Conservative funds

Medium term (one to five years) Balanced Funds

Long Term (Six to ten years & longer) Growth Funds

Adding another category would be speculative investments.

There is no guarantee what will happen to the markets this decade and in particular post-covid, therefore it pays to diversify your investment portfolio and it is for that reason that some investors are turning to gold as another string to their financial bow but like all types of investments you have to do your research. 

You can learn about investing in gold from the link below:

https://affiliates.goldco.com/l/1VRW1MU2Q/

www.robertastewart.com

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6 WAYS TO MAKE CAPITAL GAINS

The article below is of the sole opinion of the writer and is not considered to be financial advice. If you require advice on a financial matter then consult your bank manager or other financial advisor. You may share this article or publish it to your own site or blog.

6 Ways to Make Capital Gains

Written by R. A. Stewart

There are basically two types of investment income. Capital Gains and Investment Income.

Investment income is income you receive from an asset, examples of investment income are interest on savings, rent from property, and dividends from shares.

Capital gains is the increased value of an asset; examples of capital gains is the increased value of property, shares, and other assets.

Some investments provide capital gains but no income; examples of these are precious metals such as gold, bitcoin, antiques and other collectable items.

Here are investments which provide Capital Gains:

The Sharemarket

The sharemarket offers excellent opportunities for capital gain. For most people, investing directly into the markets is not an option because the transaction fees once taken out for buying and selling shares make it not worth their while, however, there are plenty of managed funds investors with limited means can participate in. Sharesies in New Zealand  is one.  Investors can drip feed money into the markets with Sharesies and there is the option of investing in various funds or individual companies. Other similar types of platforms in New Zealand  are Investnow, Kernelwealth, and Hatch. These are not the only ones though. 

Your retirement scheme invests in managed (Mutual Funds) and they are also a form of Capital Gains. In New Zealand joining kiwisaver is a no brainer. KIwisaver is New Zealand’s retirement scheme.

Property

The property market has been a popular Captain Gains tool for a lot of investors using not only their money but other people’s money in the form of a loan. Income is gained from rents which pays for the mortgage. All related costs are the most popular form of capital gains and the easiest one for the novice investor to get their toe wet in the markets and learn as you go because there are several mutual funds which are available and the start up costs are minimal. In New Zealand Sharesies only costs $1 to get into which gives you the chance to invest in managed funds or individual companies. It is a great way for tax deductible. This type of investment can turn to custard such as wayward tenants. If you are prepared to take the risk then this investment may suit.

Your own home is a good source of Capital Gains if you intend to sell at some point.

Another way to get in on the property ladder is to purchase shares in property investment companies in the sharemarket. This can be done by investing in individual companies or managed funds which invest in property.

Compound Interest

You must have heard of compound interest; that is when you invest in fixed term accounts for x% interest. Instead of receiving your interest payments into your bank account you let them be added on to your principal and you earn interest on your principal and previous interest payments. This is called compounded interest. 

The increase to your capital is called “Capital Gains.”

Interest rates are very low at present (2020); in some instances lower than the inflation rate which makes this kind of investing less attractive. It is important therefore to do your due diligence and not be enticed by some finance company offering higher interest rates than normal, because with higher interest rates comes higher risk. These finance companies offering higher interest rates lend to higher risk types of borrowers. 

I am not saying that you should not invest your money in these companies but rather do your due diligence and at least diversify your portfolio rather than plonking all of your life savings into the ione company.

Gold

This one is purely speculative but can be a good hedge against a downturn in the markets. The one drawback with gold is finding a place to store it. Another way to invest in gold is buying gold stocks in the sharemarket. Purchasing gold coins from auction sites such as Ebay and Trademe is another option. As with other investments it pays to do your homework and read all you can about gold and other precious metals. The following website provides information for those interested in gold:

https://affiliates.goldco.com/l/1VRW1MU2Q/

Crypto Currency

Crypto currency such as Bitcoin and the like should be treated as speculative investments, therefore, only invest money in this if you can afford to lose it. What I am saying is use your discretionary income to purchase crypto currency. This type of investing can be a rollercoaster but one piece of advice which may be useful is to not just purchase all your crypto currency in one transaction but to do on a weekly, fortnightly, or monthly basis so that there is a chance that you have made a purchase when the currency is low. It is called averaging.

Collectables/Antiques

Investing in collectibles can give you a sense of satisfaction and profit when you intend to sell. You really have to know your stuff when dealing in antiques. Always remember, something is only worth what others are prepared to pay for. If someone is prepared to pay $1,000 for a painting at auction then that is what it is worth, however, if another painting is sold at auction for just $10, then that is it’s worth. The value of something is only a matter of opinion.

Recently (2020), some Banksy paintings sold for over $100,000 in New Zealand. The seller of the paintings paid a total of $500 for them in London (UK) some years earlier. It just shows how one’s eye for a bargain can be profitable.

For smaller items such as postage stamps, bank notes, beer labels, and so forth collectors can list their duplicates on auction websites to help fund their hobby.

If you would like email updates from me then join here:

https://forms.aweber.com/form/72/892285272.htm

 

www.robertastewart.com

 

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KEEPING YOUR EYE ON THE BALL IN A DIGITAL WORLD

This article is not intended as financial advice so if you require financial advice see your bank manager, financial advisor, or budget advisor

How to be money smart in a digital world

Written by R. A. Stewart

It is important to be smart in this digital world we live in and that applies particularly in the banking world. With digital currency and in particular Bitcoin gaining in popularity one needs to keep their eye on the ball in order to avoid being scammed.

Investing in Bitcoin, litecoin, or whatever digital currency you use is speculative therefore it is imperative that you invest only discretionary money in these things. That is money left over after paying your important household expenses.

Visa debit cards issued by the banks are recommended for use over the internet rather than credit cards; the difference between the two is that with debit cards you are using money on the card. If there is just $200 on the card then that is all you can spend. You simply top up the card regularly by making transfers from your everyday account.

When you use a credit card you are spending borrowed money and there is a cost to this. If a scammer gets hold of the card details then you are in trouble.

I will tell you a couple of stories;

A lady who is as financially dumb as it is possible to be had her benefit paid into her visa debit card and when her benefit money disappeared from the card she went to the police and accused her nephew of stealing the money. Do you see the first mistake she made?

Having your pay go into your visa debit card which is also used for buying off the internet is downright stupidity. The police could not find any information linking her nephew to the disappearing money. They said, “It looks like the money went to an overseas website.”

A person with sense would have gone to the bank first and asked them to investigate. Another thing she could have done is check her emails because when a website withdraws money from someone’s account they send the customer an email.

An uncomfortable truth

There is a lot of internet fraud which goes unreported because victims are too embarrassed or proud to admit how stupid they have been to have been scammed. People of all intelligence from university graduates to high school dropouts have been scammed. This issue is no respecter of people, but in the case above, the lady concerned has a very low IQ but that is another story.

In a separate case a young man deposited $3,000 into his everyday account on a Friday then on the Saturday he discovered the money missing from his account. He told the bank on Monday and they did their investigation. As it turned out, it went to an overseas website which he had been purchasing stuff from. The site was hacked and the hacker had access to the banking information. His three grand went into his everyday account but that account was linked to his visa card and that was the mistake he made.

You should never link your main account to your visa debit card. If you do you are leaving the door wide open for scammers. It is also advisable to have an account which is not accessed by the internet for larger sums of money.

In the case above, the bank did the right thing and deposited $3,000 into his account.

These situations are more common than you think so it is up to ordinary people to use their common sense.

www.robertastewart.com

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LEARNING FROM PAST FINANCIAL MISTAKES

This article is of the writer’s experience and opinion. If you require financial advice then see your bank manager or financial advisor.

Learning from past investing mistakes

By Robert A. Stewart

“He who never made a mistake never made anything,” but there is no need to make a mistake if you can help it. How? By learning from other people’s mistakes.

The most tragic thing of all is to not learn from your own mistakes; here are some tragic examples which have left people with badly burned fingers.

In October 1987 the sharemarket crashed bigtime; there were horrific stories of mum and dad investors losing fortunes. Leading up to the crash investors would borrow money to purchase shares by using the value of their shares as collateral. As the share values increased, they were able to borrow more and more money. One story I was told was of a man who borrowed money using the value of his home as collateral. 

Many companies were basically called paper shufflers; in order words they were not producing anything tangible but trading in shares.

It took several years before the market recovered.

One should never borrow money to purchase shares which is the first basic lesson of investing.

During the Global Financial Crisis several finance companies went belly up in NZ; these included Provincial Finance, Hanover Finance, Dominion Finance, Lombard Finance, and South Canterbury Finance. There were sad stories with one common one being of investors who had their whole life savings invested in the company. The media’s spin on this is to tell the viewer about the investors who lost everything they invested but that is not the case. The truth is investors were drip-fed money from what the receiver’s could recover.

The investors concerned had a lot to say about all of this but one thing was never mentioned was the fact that they placed all of their financial eggs in one basket. This is a fundamental mistake. In one case, an investor had NZ$400,000 invested in Hanover Finance. One would have thought an investor with commonsense would have spread their money around. 

It does make one wonder whether someone provided this investor with misleading advice. 

The second basic lesson is to not place all of your financial eggs in the one basket.

Crypto currency such as Bitcoin and the like have been very popular during the last ten years. Stories of great wealth have been floating around from time to time of investors who have invested x number of $ and turned it into a fortune worth x. My view of Crypto Currency is that it should be treated as a bit of a gamble where you only invest discretionary income in. Only money you can afford to lose should be invested in crypto currency.

A company called “Cryptopia” which was basically a blockchain which held funds invested in Bitcoin was hacked into and all those with bitcoin invested with cryptopia lost their money. There were some sad stories of an x amount of $ lost.

The third lesson here is to NEVER invest money in cryptocurrency which you can not afford to lose. In other words only use your discretionary money for Bitcoin.

It is certainly well worth remembering that if there is a chance of capital gain then there is also a chance of capital loss. That is the nature of investing.

The bottom line is this; “It is up to YOU, the investor to take responsibility for your mistakes.

www.robertastewart.com

Investing in Gold is worth looking at but like other investments an investor needs to do their research, check out the following;

https://affiliates.goldco.com/l/1VRW1MU2Q/

Sign up for future email updates  and receive the free ebook, “Financial Steps,” here; https://forms.aweber.com/form/72/892285272.htm

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FACTORS WHICH DRIVE THE SHAREMARKET

This article is of the opinion of the writer, if you require financial advice then see your financial advisor or bank manager.

Factors which drive share prices

Written by R. A.Stewart

There can be a number of factors which motivate the markets into either direction, but the two factors which are often talked about are fear and greed. It has been said, “You should sell when people are greedy and buy when people are scared.” This is because when confidence is high the markets will go higher but when confidence is down so are the markets.

It is the law of supply and demand. Something is only worth what others are prepared to pay money for. A good example of this is a painting offered at auction. If someone is prepared to pay one million dollars for it then that is what is is worth but if a painting is sold at auction for only $20 then that is it’s value.

Looking at some industries which are likely to be affected by the economy and local trends.

  1. TOURISM/HOSPITALITY (visitors to NZ)

The collapse of the tourism industry due to the closing off of the borders of several countries will affect those companies which rely on tourism. Hotels, airlines, and airports will all be affected as will bus companies that service tourist areas. Many of these companies will not survive during these tough times so they are a risky investment.

  1. FARMING SECTOR (Fluctuating prices)

Companies in the farming sector are largely affected by the price they get for their products from abroad and this could vary depending on the economic conditions in those countries. A worldwide depression will have a major affect on prices as there is less demand for beef and other agriculture products.

  1. CHINA TRADE WAR

Policies by other countries that hamper free trade will see a reaction by the markets and we saw that with some of Presidents Trump’s comments toward China regarding trade.

  1. MOTHER NATURE

As we saw with the Christchurch earthquakes, a natural event can have a noticeable effect on share prices either way. Insurance companies were hit hard by the earthquakes which took the sting out of their share prices, but Fletcher Building were busy after the Quakes with all of the rebuilding.

  1. TRAGEDY

The Pike River tragedy had an effect on the share prices of the mining company in that people who held shares in the company lost the lot, but it serves as a reminder to only use discretionary money in risky stocks and to not place all your eggs in the one basket, but that is not to say that any of the Pike River investors made that mistake.

Even a twitter rant by the President of the United States is enough for the market to react. The market can be very sensitive but at the end of the day it is the emotion of investors behind it. A cool head is needed during times when the market is on a rollercoaster ride and investors who have the right kind of mindset can do well in the markets in the long term.

www.robertastewart.com

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ADDING A GOLDEN STRING TO YOUR FINANCIAL BOW

Adding new strings to your financial bow with discretionary income

Unless one is living from one payday to the next most of us have discretionary income which is basically what is left over after paying our fixed expenses. Rent/rates, power, phone, car running expenses, groceries, insurances, retirement savings are all fixed expenses. We do have some say in how much we are spending in some of these areas such as you can find ways to use less power, be more economical with your grocery shopping, or use the car less often.

What is left over is your discretionary spending. 

This spending money can be used for more speculative investments. If you lose your money then the loss of your money is not going to cause you undue hardship.

So where to invest this money? 

There are plenty of options such as crypto currency, investing in gold & silver, and the futures market.

Investing in gold is one option; there are different paths to take, they are:

(1) Purchasing shares in companies which mine gold

(2) Purchasing gold coins

(3) Investing in gold bullions

It is important to diversify but this may not always be practical for someone with limited means. Fortunately, Sharesies in New Zealand offers investors the chance to buy into the sharemarket with a minimal amount of money. If you are not from New ZEaland it is best for you to take a look at what options are available to you.

If you are going the sharemarket route then do your research on the mining companies and their track record. Also take note of whether the area they mine has met with opposition from environmentalists.

Knowledge is the key and if you do not know much about gold you can sign up here and learn from the experts:

https://affiliates.goldco.com/l/1VRW1MU2Q/

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