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Your Investing Risk Profile is an Important Factor

Working out your risk profile

Investing money has its risks, more so if you are prepared to go for growth type of investments but you may not have the stomach to take on risky investments.

It all depends on your investment time frame which basically means how long it will be before you need the money.

The longer your time frame the more risk you are able to take with your money.

There are factors which determine your time frame and they are:

Your Age

Obviously if you are 65 then you are not going to set a 30 year savings goal, if you are in your 20s you can take more risks but that does not mean you should be reckless and just invest all your money in Bitcoin in an attempt to get rich quick.

Your health

Your savings goals

The key strategy whatever your risk profile is diversification.

That is to spread your portfolio over a wide range of industries. This is possible for the ordinary man and woman in the street who are able to invest in managed funds where your investment is combined with those of others. It is then up to the fund manager to handle all of the investments. This is exactly how kiwisaver operates.

Each fund will give you an option of investing in Conservative, Balanced, or Growth funds and your decision of which fund to leave your money in will be determined on whether you can stomach heavy losses should the share market go belly up. If the thought of losing your money will cause you sleepless nights then you should go for balanced funds. Conservative funds will not grow your money at the same rate as balanced or growth funds will and once the fund manager withdraws their fees it may feel as though your money is not growing at all.  As far as Kiwisaver is concerned, the government will contribute 50% of what you put in to a maximum of $520 every year so at least this would make it worthwhile for you to at least contribute $1,040 a year to get the $520. This will seem like obtaining 50% interest on your  $1,040 for that year.

It all adds up and no one is going to reach the retirement age of 65 and regret that they contributed to their Kiwisaver.

Your risk profile is not the only determining factor in deciding which fund to choose. If you are saving for a deposit on a home then you are not going to want to risk losing your money in the share market which will happen if you had all of your money in Growth funds only for the markets to tumble.

Investing in growth funds for long term growth and taking needless risks are not the same thing.  If you invest in something dodgy without knowing anything about what you are investing in then you are asking for trouble.

Your age is another factor to consider. When you are young, it is advisable to go for growth funds because you have more time to recover from a financial setback such as a market crash, whereas someone nearing retirement would have their retirement plans affected should this occur.

It is your money however and your own responsibility to decide where you are going to invest so learn all you can about the various types of investments and in time you increase your financial literacy.

It is sensible to diversify and invest in a range of industries. Placing all of your eggs in one basket  is not sensible. There are stories of those who did just that and lost during the Global Financial Crisis as several finance companies fell.

The information given here is my own opinion and not given as financial advice. It is best to seek professional financial advice if you are unsure.

Note: Kiwisaver is New Zealand’s retirement savings scheme and this information may not be applicable in your own country. 

www.robertastewart.com

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3 Ways to lose during a Share Market Slump

It is easy to be very confident about your investments when all is going well and your investments are rising in value but it is when the market has taken a dive when your real character is revealed.

Investing needs to be done with the right mindset otherwise allowing your emotions to take over your decision making can turn out to be very costly in the long term.

The newspapers may say, “Investors have lost millions,” but the reality is they have lost nothing, well not unless they have sold their shares during a market slump.

If you have an investment strategy then the possibility of a downward trend should have been taken into account so a market downward trend will not be of a concern.

There are three ways which you can lose during a share market slide; here are are:

  1. Sell your shares

Selling your shares during a market slide is a guarantee that you will lose; more so if you bought your shares during the peak. The share market will have it’s ups and downs and is a long term game. If you are saving money for the short to medium term then investing in growth funds may not be the right place to have your money. On the flip side of that is a rising market can help you reach your savings goals faster. It is the catch 22 situation in that if there is an opportunity for a capital gain there is an opportunity for a capital loss.

  1. Change funds

Changing from growth funds to balanced or conservative during a market downturn is a way of guaranteeing a loss. In other words you are selling shares at a lower price than you bought them for. It is the issue of allowing your emotions to rule your better judgement. 

  1. Stop Contributions to your retirement fund

This is a sure way to lose during a market slump because you are missing out on bargains in the share market. You may not lose your money by not investing during a market slump but you are losing in other ways because if you decide to just leave your money in a low interest savings account the value of your savings is being eroded by inflation.

Talk about a sure fire loser!

The share market rewards consistency and that means making contributions through good times and bad. During times when the share market is during a bear market phase you will get shares at below their market value while during a bull market cycle you will get a lot of shares at above their market value. All of this will average out over a period of time and the longer you are involved in the share market and participating the more chance you give the law of averages to work in your favour.

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Start investing on a shoestring

Sharesies makes it possible for anyone to get into buying and selling shares. It is an online share market platform where you have the option of purchasing shares in individual companies or in various funds (managed/mutual funds). You can even start with $5. This is a no brainer because it gives investors young and not so young the chance to improve their financial literacy. There is certainly no substitute for experience when it comes to learning and this is applicable to everything else, not just investing.

Join sharesies here: https://sharesies.nz/r/377DFM

 

Note: This article is of the opinion of the writer and may not be applicable to your personal

www.robertastewart.com

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7 New Year’s Resolutions which are Destined to Fail

  1. Lose weight

A New Year’s resolution to lose weight is destined to fail because it is vague and not specific. It does not say how you plan to lose weight and how much weight you are going to lose. A better goal will be “I am going to Give up going to fast food outlets” or “I am going to join the local running club.” If you are going to give something up then it may be an idea to have some alternative healthy options in mind. Focus on living an active and healthy lifestyle and the weight issue should take care of itself.

  1. Save Money

A New Year’s resolution to “save money” is just as vague as a goal to lose weight. There is no power to it. If you are just frittering away your discretionary spending money and have little or nothing to show from your labours then something has to change in order for your finances to change. You are better advised to decide on what you are saving for and take the steps needed to get there. Joining kiwisaver if you are not already enrolled has to be your number one priority. There are share market platforms such as Sharesies, Hatch, and Kernel Wealth which are set up to enable ordinary people to invest in the share market.

  1. Get Fit

A New Year’s resolution to “Get Fit,” is another one which is destined to fail because it is too vague and not specific enough. How you are going to get fit is not answered in a “Get Fit” resolution. If you have a “Get fit” resolution then what happens is that after a couple of days of running around the block or a few games of backyard cricket old habits will take over and your New Year’s resolution will become a distant memory.

  1. Learn to Swim

“Learn to swim” as a New Year’s resolution is not specific enough. It would be better to have a goal of, “To take lessons at the local pool once a week,” or to resolve to practice one new swimming skill every week. It is consistency which drives results. 

  1. Learn to Drive

Another example of a vague goal. It is better to have a New Year’s resolution of “I intend to sign up for driving lessons on New Year’s Day or whenever the Driving School is open for business after the holiday break.

  1. Get a Job

Deciding to “Get a Job” as your New Year’s resolution means that just taking any job which comes along will fulfil your goal. If that is what you want; that is fine but if you have something specific in mind then specify it otherwise you will end up with nothing. It is worth keeping in mind that many people will work at something they do not like until something more suitable comes along.

  1. Learn a new Language

This is another example of a goal which is not specific enough. There are dozens of languages you could learn so which one are you going to tackle? It will be better if you set a goal of “I will learn one new French/Chinese/Italian or whatever word per day. Such a goal is specific and tells you what you need to do in order to achieve your goal.

 

Your New Year’s resolution needs to be specific and have an action in it otherwise it will be just a wish. It is your desire which will enable your New Year’s resolutions to become the permanent change you are seeking. Just take one day at a time and see what happens.

www.robertastewart.com

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My Experience with Network Marketing

Network marketing

The success of network marketing companies such as Amway, Herbalife, and Kleeneze has proved that the Multi Level Marketing concept can work if you choose to join the right company and if you approach these schemes with the right attitude and are prepared to spend a lot of money, in some cases 1000s in order to progress up to the highest level in the company.

Almost any product or service can be marketed through network marketing but the main players in the MLM industry seem to be those which focus on nutrition and personal care products.

Any company which promises high returns by recruiting others into the scheme with the absence of tangible products is likely to be a pyramid scheme which is illegal in many countries including New Zealand, Australia, Canada, The UK, and Ireland. The promoters of these schemes describe them as MLM or network marketing companies in an attempt to legitimize them.

If a proposition seems too good to be true then it most probably is, there is no such thing as a free lunch, if in doubt then seek legal advice.

The money to be made in network marketing is in the recruiting and training of others. The object is for your team members (the persons you recruit or sponsor) to duplicate your efforts.

Does this sound like pyramid selling.? Well you be the judge because there are some very well-known companies who sell products in this manner.

Amway which was established in 1959 was the frontrunner in the network marketing field. Herbalife (established 1980)

Then there is Melaleuca which sells products using tea tree oil. Melaleuca which is the botanical name for tea tree has tried to distance itself from the network marketing image by using the term referral instead.

All these companies would almost certainly scoff at suggestions that they are all pyramid schemes. 

Many people who have reached the top of the tree in network marketing have done so only after investing a great deal of money (1000s) and in some cases going into debt but whether they have made any real money is another matter altogether.

The British company Kleeneze (established 1923), is different from other MLM companies in that agents drop off catalogues at people’s homes, collect them a few days later, and if there is an order deliver the goods to them perhaps a week to 10 days later. This method of selling is similar to Homecare direct shopping in NZ and Australia except that with Kleeneze, you can increase your income potential by sponsoring others into the business.

However as with other companies, finding other people who share your vision and that of the company is a problem. 

Before you commit yourself to one company, do an internet search to find out how others have feared. You will find a lot of feedback in this way however please also bear in mind that the opinions of others may not be a reflection of the company but merely their attitude, the company they joined may not have been right for them and who is to say that is not the right one for you?.

Kleeneze is one company I had success with. By dropping off catalogues at houses then collecting them 2 or 3 days later hopefully with an order much the same as Homecare direct shopping do in New Zealand and Australia but the difference between Kleeneze and Homecare is that Kleeneze is a network marketing company.

Every Kleeneze agent gets 21% commission of all orders collected irrespective of their status in the company. These are orders obtained by dropping off catalogues at people’s homes, picking them up a few days later hopefully with an order and delivering the goods, collecting the money and paying the company minus your commission.

It is in the bonus structure where you can really make the money.

By introducing others into the business, their sales figures are combined with yours to form what is described as volume total.

You earn a bonus on your total volume orders for the month as follows.

Monthly total Bonus

650-1299 10%

1300-2249 13%

2250-3399 15%

3400-5000 18%

5100-7499 21%

7500+ 24%

There are other bonus payments available.

Kleeneze proved very lucrative just by dropping off the catalogues and developing a regular round of customers, I did have three people under me but they gave up after a week or so, one after owing me more than 300 pounds. That is not going to occur now as everyone who joins Kleeneze now has their own account 

The main quality for success with any of these network marketing is passion for what you are doing. Without it you have not a chance of succeeding. Of course agents of the companies concerned will present the companies to you wearing rose tinted glasses, because everyone they sponsor into the business is helping to build theirs.

Melaleuca was a referral company I joined some time ago however I parted company with them when I lost my job.

Each person who joins Melaleuca agrees to purchase 35 points worth of product per month which equates to about $120. This is irrespective of whether you need any product or not. Agents can earn bonuses by referring others into the business. Agents require at least 8 referrals just to pay for their monthly order. A tall order indeed since the products are rather expensive, for example toothpaste around $9 and shampoo $19.95. 

This business would suit people who have contact with others in high paying jobs where money is no object to them

Herbalife is the same but as with all of the other MLM companies, though agents may claim to have received cheques from them for xxx, the amount they have poured into the business is quite a bit more.

To sum up, don’t go into network marketing as a means to get rich quick with little effort, you will be disappointed. Go in with an open mind. Check the credentials of the company and whether it is the right one for you and most of all ask yourself this question “what motivates me”.? If you know the answer then it’s a start.

 

To summarise: Network marketing is not the best way to make money for the majority of people. The majority of people involved in these types of businesses are subsidising those at the top. If you are thinking of joining, keep an open mind and understand what you are getting involved in. Above all else, don’t allow anyone to pressure you into joining.

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. You may use any or part of the article as content for your website/blog, or ebook.

www.robertastewart.com

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Sharesies vs. Hatch: Which Investment Platform is Right for You

Introduction

Investing in the stock market has become more accessible than ever, thanks to the proliferation of online investment platforms. Two popular options in New Zealand are Sharesies and Hatch. These platforms offer different features and cater to various investment preferences, making it essential to understand the differences between them to determine which one is the right fit for your financial goals. In this article, we’ll compare Sharesies and Hatch, exploring their key features and what sets them apart.

Sharesies: Making Investing More Accessible

Sharesies, launched in 2017, has rapidly gained popularity in New Zealand for its user-friendly interface and mission to democratize investing. The platform allows users to buy and sell fractional shares, making it ideal for those who want to start investing with a limited budget. Here are some key features of Sharesies:

  • Affordability: One of Sharesies’ standout features is its ability to buy fractional shares, meaning you can invest in high-priced stocks without needing to purchase a full share. This opens up investment opportunities for individuals with modest budgets.
  • Diverse Investment Options: Sharesies offers a wide range of investment options, including New Zealand and international shares, exchange-traded funds (ETFs), managed funds, and more. This diversity allows you to build a well-rounded portfolio to meet your investment objectives.
  • User-Friendly Interface: The platform is designed with the user in mind, making it straightforward for beginners to start investing. It provides educational resources and tools to help users understand the world of investing.
  • Transparency: Sharesies is transparent about its fees, making it easy for investors to understand the costs involved in their investments. The platform charges an annual subscription fee, which can be advantageous for active investors with a larger portfolio.
  • Community and Social Element: Sharesies fosters a sense of community through its forums and discussion boards, where users can engage with other investors, share their insights, and learn from one another.
  •  Join Sharesies here

Hatch: Access to International Markets

Hatch, on the other hand, is designed to provide New Zealanders with access to international investment opportunities. It offers a gateway to the US and Australian stock markets, allowing users to invest in companies listed on these exchanges. Here are some key features of Hatch:

  • Access to International Markets: Hatch enables New Zealand investors to purchase shares in companies listed on the US and Australian stock exchanges, such as Apple, Amazon, and Tesla. This access to global markets provides diversification opportunities beyond the local market.
  • Direct Ownership of Shares: Hatch allows users to directly own shares in the companies they invest in. This means you have more control over your investments and can receive dividends if the company pays them.
  • Wide Range of Investments: In addition to individual stocks, Hatch offers access to ETFs and index funds, providing a broad range of investment options to suit various strategies and risk appetites.
  • No Subscription Fee: Unlike Sharesies, Hatch does not charge an annual subscription fee. Instead, it operates on a transaction-based fee structure, where you pay a fee when you buy or sell shares.
  • Educational Resources: Hatch offers educational resources and insights to help users make informed investment decisions, particularly in the context of international markets.
  • https://app.hatchinvest.nz/share/rtb24muk

Which One Should You Choose?

The choice between Sharesies and Hatch ultimately depends on your investment goals, preferences, and level of experience. Here are some considerations to help you decide:

Choose Sharesies If:

  • You are a beginner investor or have limited funds to start with.
  • You prefer to invest in New Zealand shares and ETFs.
  • You appreciate a user-friendly platform and a sense of community among fellow investors.
  • You want transparency in fees and are comfortable with the annual subscription model.

Choose Hatch If:

  • You want to access international markets and invest in US and Australian stocks.
  • You have a specific interest in owning shares in individual international companies.
  • You are comfortable with a transaction-based fee structure and don’t want to pay an annual subscription fee.
  • You are looking for diversified investment opportunities beyond New Zealand.

Conclusion

Sharesies and Hatch offer unique investment opportunities, catering to different preferences and financial goals. Sharesies is well-suited for those looking to invest in New Zealand and start with a limited budget, while Hatch provides access to global markets and individual international stocks. Carefully assess your investment objectives, risk tolerance, and budget to determine which platform aligns with your needs. Both platforms have their strengths, and the choice between them should be based on what suits your individual circumstances and investment strategy.

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

www.robertastewart.com

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Budgets for personal finance

Establishing a budget is an excellent way of tracking your spending and  you do not need to be struggling with money matters in order to benefit from using a budget. 

Budgets can expose some cold hard home truths

Doing a budget can be the simple solution to rectifying a challenging financial situation but few people do a budget because it exposes spending habits which they prefer to keep hidden. Many people do not want to change their habits despite it costing them an arm and a leg.

There are two parts to a budget.

Your income and your spending.

Your income can be wages from a job, profit from a business, or  income from investments.

Your spending covers everything which is costing you money. 

In short if it makes you money it is income and if it costs you money it is spending.

If you can do some simple maths you will soon discover whether you are left with a surplus or a deficit.

If you have a surplus and you are in debt, use the money to pay off your debt.

If you do not have any debts you can use some or all of your surplus for one or more of your goals; this could be saving for a holiday, saving for a house deposit, saving for a car, or investing it in the share market.

There are so many places to invest your money these days that if you did your homework you will find an appropriate investment for your circumstances.

If you have a deficit you need to take some kind of action rather than try and bury your head in the sand because if you do nothing your financial situation will worsen.

There are two things you can do to balance the books;

1 Reduce spending

2 Increase your income

I don’t know how financially literate you are but if you do not understand financial jargon then I advise you to see a financial advisor to discuss your situation. The public library will have information on where to find a budget advisor.

At the Library will will also find good books on how to manage your finances and increase your wealth.

A budget advisor is unable to help you unless you are completely honest about where your money is going. 

It is up to you to make the decision on which sacrifices you are prepared to make. No one else can make that decision for you.

Your spending can be placed in two categories, your needs and your wants. You may be able to reduce some of the money you spend on your needs but it is the money you spend on your wants which you may find easier to eliminate. 

Being able to afford whatever it is you need can be as simple as re prioritizing your spending. It is a matter of transferring your spending from one item to another.

ABOUT THIS ARTICLE

Feel free to share this article with others. You may use this as content for your ebook or web page. Check out my other articles on www.robertastewart.com

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Share Tumble Scenario

INTRODUCTION

The share market has enjoyed a great run since the Global Financial Crisis. Will it continue or will a major fall in the markets put an end to it all? No one knows therefore, it is important to set proper financial goals and use strategies to factor in scenarios which may or may not occur.

What to do if the share market crashes

The 1987 share market crash known as “Black Monday” wiped out fortunes as many investors lost their life savings. Those of a generation who were around back then will be well aware of what can happen when you place all your eggs in one basket as many investors did. I mean there were stories of investors borrowing money to purchase shares using the value of their shares as collateral. When the markets went down, the value of their shares were a fraction of the money owed on the borrowed money.

The 1987 crash was the worst crash since the 1929 Wall Street crash. There were almost 60 years between 1929 and 1987 so investors need to reassure themselves that another crash may not fall within their lifetime.

So what should investors do when the markets are falling?

Here are my 5 tips:

1 KEEP CALM

Do not fret, markets go up and down like a roller coaster. Treat the markets as a long term investment. If you are young then you have time on your side. There is time for you to recover from financial setbacks. Even if you are say 50 you still have another 15 or so years before you reach the age of retirement so you do not really need to be too conservative, however, someone who cannot stomach the thought of rapidly falling markets would disagree. It all depends on your temperament. 

A financial adviser is likely to steer you to more conservative investments if you are approaching what is termed “The retirement age.” 

2 STICK TO YOUR FINANCIAL PLAN

It is important to stick with your original plan despite all of the negativity in the newspapers which will no doubt arise after a crash. When planning your financial strategy your plan needs to factor in the possibility of a share market tumble. Shares can take investors on a roller coaster ride which reward persistence.

3 DON’T TRY TO TIME THE MARKET

It is time, not timing, which rewards share market investors. Few investors have the knowledge to predict the movement of a share price and those who do and take advantage of it are breaking the law because it is known as insider trading. Investors should do their homework first and trust their own judgment when deciding on which shares to buy. 

4 KEEP SAVING AND INVESTING

The markets reward consistency. Investing into the markets when there is so much negativity which will follow a crash will pay off. As they say “Fortune favors the brave.” The advantage of investing when there is not much negativity and uncertainty in the markets is that you will be able to snap shares up at bargain prices and as the market recovers, investors will gradually jump on the bandwagon and in doing so will give it a shot in the arm.

5 LISTEN TO THE RIGHT PEOPLE

A share market crash will dominate the news for weeks and all of a sudden there will be financial experts coming out of the woodwork with advice on what you should do with your money. A smart investor will be able to discern between good, bad, or downright stupid advice.

www.robertastewart.com

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The Futility of playing the lottery

The Futility of playing the lottery

INTRODUCTION

Is it possible to use a system to beat the odds and live a life of luxury? The lottery or lotto as it is called in New Zealand first began in 1987 and I have never heard of any lotto winner claiming to have found a system to beat the odds. Most have won using lucky dips or lucky numbers, others have just selected their own numbers. 

The odds of winning the lottery

Lotto is played by millions of people worldwide in the hope of one day becoming lucky but for the vast majority of people that lucky lotto day never arrives. The huge odds against winning lotto ensures that millions contribute to the pool but only a few hit the jackpot.

In New Zealand a lotto player is require to select six drawn numbers out of forty. It is called division one. The odds of any one set of six numbers being the successful six are in in three million+

Power ball is when you have selected division one + the power ball number which is 1-10. The odds of winning power ball are so remote that one is more likely to be struck by lightning. It is not surprising that the power ball often jackpots to huge amounts.

Some mathematicians have described the lottery as a tax on stupidity.

At least 66% of New Zealanders play lotto at least once a year. I do not know how many of them play every single week.

People who would otherwise consider themselves intelligent fall for the enticing advertising in order to participate in a gamble that is unlikely to succeed. Rationality simply goes out of the window.

A song and dance is made about the fact that 20% of all lotto sales is donated to various charities.

What I have to say about that is the lottery sucks out more money from communities than it returns. 

If one was simply donating to charities directly the person making the donation is able to claim 33% back in tax. (New Zealand). The advantage of donating to charity directly is one can choose who to give money to.

Lotto players will completely ignore all of the mathematical statistics with the argument, “You have got to be in to win.”

Problem with that kind of thinking is that few people ever do and often when they do win something, the payoff is usually one of the smaller prizes which is often spent on buying more lottery tickets or quickly frittered away in the blink of an eye.

ANNUAL LOTTERY SPENDING

If a lotto player spends $10 per week on the lottery that equates to $520 per annum. Think of what else that could have been invested in or put to better use.

There are so many share market trading platforms around today that the $10-$20 per week spent on lottery tickets could easily be used to start an investment portfolio.

Do the mathematics; $10 per week equates to $520 per annum. Over a lifetime this all adds up to a fortune.

LOTTERY SYSTEMS

Many people will swear by systems; whatever you are told the statistical odds of any set of six numbers being drawn are the same, however, if you choose numbers or a combination of numbers that are not chosen by other players then you will share the prize pool with fewer players if it is your lucky day. This is the type of strategy used by some system promoters.

Do not be deceived into thinking that any system will increase your chances of winning. This is not true!

As far as finances are concerned, I am saying that the money spent on lottery tickets is better directed at investments where you at least have something to show for it such as your retirement fund. 

It should be kept in mind that the lotto millionaires are created only because millions of lotto players have lost. You don’t have to be one of them!

ABOUT THIS ARTICLE

You are welcome to use this article to post on your site, as content for your ebook, or share it on social media. Visit my site www.robertastewart.com for other articles on finance.

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Investing 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 share market crashed big time; 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 whatever money the receiver’s could recover.

The investors concerned had a lot to say about all of this but one thing that 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 one basket.

Cryptocurrency 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.

It should be worth remembering that for every person that made a killing of some kind, whether on the share market, cryptocurrency, or other kind of investment, there will be a lot more people who lost their money. What usually happens is that many of those who made the killing will try to repeat the feat and end up giving back most if not all of their gains.

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

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7 Ways that Emotional Spending can ruin your financial plan

7 Ways that Emotional Spending can ruin your financial plan

Written by R. A. Stewart

The best financial plan can be undermined by emotional spending; unless you have the right mindset all of your self discipline and planning can be undone by a moment of madness. 

Here are 7 Emotional Spending Habits can hurt your finances:

  1. Pets

Pets can be very costly and unless you are able to keep your emotions in check they can cost you an arm and a leg. A perfect example of this is when a dog or cat lover will spend a grand or more on a vet bill for their pet moggie when the practical thing to do is to just have the thing put down. Keeping pets can be a drain on one’s finances so it is not surprising that the SPCA are inundated with unwanted pets during the cost of living crisis. The money spent on keeping these pets could have gone toward a rainy day fund which would have enabled the people concerned to weather any financial storm which came along. Personally I think that spending $1,000 on a cat is stupidity.

  1. Expensive Gifts

Buying expensive gifts is another drain on one’s finances. The recipient may appreciate the gift but it is not the same as liking you. What I am saying is that if the only reason why they like you is because you are spending a fortune on them then they like you for the wrong reasons. People who are always buying gifts for others are approval seekers. They seek approval from others and gift giving is their way of achieving this. Giving expensive gifts will drain your finances and is not worth it because it will add up to a fortune in the long run.

  1. Alcohol

Spending too much on alcohol has put paid to many promising careers not to mention being a drain on their finances. Problems with alcohol are usually brought on by emotional needs. Whatever issues you have will be made worse by alcohol therefore it is better to deal with whatever problems you have rather than trying to forget them with alcohol.

  1. Sales (Boxing day, Black Friday, etc.)

You have seen all of the sales advertised on the TV and the internet. Black Friday and Boxing Day sales The sales frenzy on these two days is unreal and it is generated by advertising which appeals to the “Fear of missing out” emotion. 

  1. Lotteries

Gambling is a harmless bit of fun if you are sensible about it but it is when you start placing sizable bets that are affecting your budget that when there is a problem. If that sounds like you then it is time to take stock and find a less expensive hobby.

  1. Cars

Some people are not satisfied with just a vehicle which is adequate for their requirements; they have to go out and spend a lot more on something which is flash in order to impress their peers. Your ego has to be kept in check otherwise it will cost you a fortune over your lifetime. 

  1. Manipulation

Having a strong will and self-discipline will help you become wealthy because there will be people who you have to deal with on a daily basis who have differing views to you as far as finances are concerned. People will try to get you to conform to their values in order to make you just like them. Some will try a tactic known as manipulation by guilt. This is when you are made to feel inadequate or guilty because you won’t do as they say or conform to their value system.

The bottom line is, “They will play on your emotions.”

Don’t try to reason with these people because that type of individual tends to contradict everything you say.

About this article

You may use this article as content for your blog/website or ebook. The article is of the opinion of the writer and may not be applicable to your personal circumstances.

www.robertastewart.com