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GOALS AND YOUR INVESTMENT STRATEGY

Your goals and investment strategy

The type of investment you place your savings in all depends on your goals and the timeframe for achieving your goals. Investing in low interest accounts is not the best strategy for long term goals while investing in growth funds in the sharemarket is not necessarily the best option for achieving your short term goals. Your investment platform has to be tailored to suit your goals. This table will give you better idea of what I am going on about.

SHORT TERM GOALS

A short term goal is any goal which can be achieved within a year. This may be for a holiday to the West Coast (if you are from another district) or saving up for a car (if it is cheap enough).

MEDIUM TERM GOALS

A medium term goal takes between a year to 5 years to achieve and can be saving for a house deposit or an overseas trip.

LONG TERM GOALS

A long term goal may be saving for your retirement or paying off your home mortgage.

Lets look at some investment options.

SHORT TERM GOALS.

If you already have the money saved up but won’t be needing the money for 3-6 months then investing in fixed term accounts with one of the high street banks is a good option but if you are actually saving up the money then opening up a special account for this is one but not ther only option. I understand that one is able to drip feed money into bonus bonds and it is easily accessible. Investing in Sharesies may be another option worth taking a look at

MEDIUM TERM GOALS

Investing in Sharesies is a good option I believe because your savings has potential for growth while you are saving but another option is to use an everyday savings account to save and once you have saved a certain amount invest in a 90-day investment with a high street bank. 

It should be pointed out that if you are saving for your first house deposit then joining kiwisaver is a must because you are able to withdraw part of your kiwisaver for a first home deposit providing you have been in the kiwisaver scheme for at least three years.

LONG TERM GOALS

Investing in kiwisaver is your best option here irrespective of the date of your birthday because even if the  retirement age of 65 is just around the corner, you can scale back the type of funds you are in from growth/balanced to more conservative however people may have 20 years or more left after they retire so this may not necessarily suit some people. Once one reaches 65, those in kiwisaver are able to withdraw their retirement savings in one hit or whenever they need it. 

There are so many investment options available to you and you do not have to be rich to get involved but you do need to invest to get rich, one investment I am in favour of is Sharesies;

If you would like email updates from me, you can sign up here;

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www.robertastewart.com

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YOU DON’T HAVE TO BE RICH TO INVEST

A Mum and Dad share market investment (New Zealand only)

Investing directly in the sharemarket is an option not available to the ordinary Kiwi because broker fees makes purchasing small parcels of shares uneconomic; then there is the question of diversification, the strategy of purchasing a number of shares from different industries; this is out of the question for small investors.

The best option is to invest in managed funds where everyone’s money is pooled together to purchase funds. It is just like a retail chain being able to purchase in bulk in order to purchase goods at a cheaper rate. Kiwisaver, the New Zealand retirement scheme is a perfect example of this.

A person on the minimum hourly rate working 40 hours per week would have $27.50 going into kiwisaver every week if they were paying 4% of their gross wages into KIwisaver. 

This is a terrific way to build up your retirement funds!

There are other options available for Mum and Dad investors; the one I am going to talk about is Sharesies.

This is a managed fund just like Kiwisaver but where it differs from that scheme and other managed funds is that you are able to choose which companies to invest in. 

It is a terrific way to build up your financial literacy with a minimum of outlay.

Check out these features of Sharesies;

1 Just $30 to join and $30 per annum thereafter

2 Start the fund with just $20

3 Invest as little as $10 in shares.

You will be given a reference number which is used when you deposit money in the sharesies bank account.

Think of money as a seed, if you sow seed in enough places it will reap you a nice harvest at a later date.

Money can really grow when you invest in a number of places and sharesies is an excellent addition to an investor’s financial portfolio; you can check it out here;

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

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HOW TO ADD ANOTHER STRING TO YOUR FINANCIAL BOW

Sharesies makes investing accessible to all!

Do you have some discretionary dollars to spare and are wanting to invest in a fund with growth potential then look no further than Sharesies; a managed fund which is proving popular among all ages, particularly the young. Sharesies is an excellent investment vehicle for Mum and Dad investors who are looking to add another string to their financial bow but don’t have much money to start with. Even if you have only a spare $50 to start with, it is a start, and Sharesies a great way to invest and at the same time increase your financial literacy.

What is Sharesies?

It is a managed fund, much like kiwisaver but the difference is with Sharesies you are able to choose which companies to invest in. 

How much does it cost to join?

$30 per annum, but you do have the option of having monthly payments debited from your account. Payment can be done by a visa debit card or whatever means you choose.

What is the minimum amount to start off with?

You can start the fund with as little as $20 and make regular deposits to the fund (minimum $5) after that; this can be done by making direct credits to the sharesies account or just simply transferring money into the Sharesie account regularly.

How do I make deposits into Sharesies?

You will be given a reference number which is used each time you make a transferal online; you will also be given the Sharesies bank account account number. It also pays to place your username in one of the slots where you write your deposit details to help Sharesies track you if something goes wrong. (I once left a number out of the reference number)

How do I join Sharesies?

Go to the site by clicking on the link below;

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

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YOUR FINANCIAL RISK PROFILE

Your risk profile-what is it?

Your risk profile is the level of risk you are willing to take when you make an investment! The higher the potential return on your investment, the higher the risk but the catch 22 situation is that just parking your money in low risk low return investments will inhibit your potential returns and could end up costing you in the long run. Taxation and inflation will eat away your profits so investing needs to be a balance between risk and reward. 

Your risk profile is a big factor when deciding how you are going to invest and that has several parts to it so lets examine them.

1. YOUR AGE

When you are young, you are able to take more risks because you have more time to recover from financial setbacks but that is not to say you cannot be on the conswervative side if your circumstances warrant it. 

It also does not mean that you cannot take risks when you are approaching retirement because chances are that you could live long after you retire. 

2. YOUR GOALS

It would be madness to invest in high risk (growth investments) if you require the money in the short term, say within the next 6 months to pay for a wedding, new car, or whatever because the markets may be losing ground and you may end up with less money than you intended. Therefore for money you require in the short tern, invest conservatively. 

3. PERSONAL MAKE UP

If the prospect of losing your money is going to cause you to lose sleep then lean towards more balanced investments. These are a combination of growth and conservative investments. 

Your potential return will not be as much as it could be but at least you will sleep easy, albeit, at a cost.

4. YOUR FINANCIAL SITUATION

If you are up to your eyeballs in debt then clearing that debt has to be your number one priority and staying out of debt is priority number two then you can think about saving for whatever reason. Investing in the kiwisaver scheme is a very good investment for the reason that there are tax credits of up to $520 per annum and you are entitled this providing you invest a minimum of $1040. That equates rto 50% return on your investment, tax free. Where else will you get a return like that?

At the end of the day, it is your money you are investing and it is you who will bear the consequences for any financial decision make.

If you would like email updates from me then you can sign up here;

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

www.robertastewart.com

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KEEPING UP WITH THE JONES

The cost of keeping up with the Joneses.

Keeping up with the Joneses cost cost you dearly and determine how you spend your retirement years. Life seems to be a competition to at least have a car or house which not only serves the person for which it was made for but makes a statement which says, I am at least the equal of the Jones’s.

So who are the Jones’s?

They are other people who have that fancy car, that nice house, that nice swimming pool, or that nice whatever that is the envy of others. 

The bible says “Do not covet another man’s wife or belongings,” which is saying we should not envy another person’s lifestyle and I will tell you why.

Firstly, you do not know how hard they have worked for whatever they have or what kind of sacrifices they have made.

Secondly, for all you know, they may be up to their eyeballs in debt trying to compete with everyone else in the material rat race.

Thirdly, their income may be twice as much as yours. There is an old cliche which says, “Living a champagne lifestyle on a lemonade budget.”

Your spending and savings plan must be a reflection of your income level and that means to forget what others are spending their money on and focus on your own situation.

There are certain spending habits which will cost you thousands in the long run and they are;

1. BUYING ON HP

The interest payments on consumables bought on HP (Hire Purchase) will add up to a fortune during your lifetime. Interest is dead money; in other words, it is money you pay but do not receive anything for it.

2. CREDIT CARD USE

Interest rates on credit cards can be horrendous if you get behind on your payments. As with HP, interest is what you pay for the use of other people’s money. Greed and selfishness manifests itself in widespread credit card use.

3. BUYING STUFF BRAND NEW

A lot of consumer goods are bought brand new when you can purchase the same item second hand at a fraction of the price at a charity/second hand shop. The eco centre at your local tip also has low cost goods for sale at a very low price. 

Many people are too proud to even set foot in these places because it is not in keeping with the image which they are trying to portray.

Trying to maintain an image during your lifetime will cost you dearly in the long term. 

www.robertastewart.com

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GETTING THE RIGHT ADVICE

Listening to the right people…

Taking advice from the right people and ignoring comments from the uninformed will help you to become better off financially in the long run. An example I am going to use is my nephew Kyle who had made a bit of money from sports betting. He withdrew all of the money from his betting account and invested the money in a fixed interest account. His goal is to save money for a house deposit but he is almost got the money now. It is some of the advice or rather comments that he has been given that really gets me, with some of it bordering on stupidity.

Myself, I advised him that investing in the New Zealand retirement savings scheme Kiwisaver would be a good bet because he would be able to use part of his kiwisaver for a house deposit providing that he has been in kiwisaver for at least 3 years and that it is for his first home. He would qualify on the latter as he has never owned a home but he has been in kiwisaver for just 6 months and is unwilling to wait another 3 years.

That may be so, but everyone in kiwisaver should at least contribute $1040 into the scheme per annum to take advantage of the full tax credits of $520. This is effectively a return of 50% per annum on your investment, all tax free.

The advice I gave is exactly the same as every other financial expert have been saying, and no, I am not qualified to give financial advice to anyone but then neither are many of those who have been adding their two cents worth. Some of them have little money or assets and have nothing to show for their life’s work.

If you hang around losers, you will be one yourself. What they will do is drag you down to their level because then that it will make them feel better about themselves. Some people have such a low opinion of themselves that they will tear others down because the success of others is giving them an inferiority complex.

To use Kyle as an example, he has prospered since he moved out of his auntie’s flat.

Kyle has more financial sense than any of his siblings; one of whom told their mother that he has a gambling addiction. He withdrew 10k from his betting account and invested the money and when he told his brother that he had nothing left in his account that he had nothing left, he thought he had lost the money.

The pathetic thing about this is that this sibling cannot live a day without alcohol and smokes like a chimney that who knows how much of his income is disappearing every week on booze and smokes. Multiply the weekly amount spent on this and the amount spent annually on his vices is quite substantial, certainly in the 1000s.

It pays to not let others know what you are doing and keep your activities to yourself apart from those who are on the same page.

As for investing money into his retirement fund to save for a house, well that may not be the right option for someone looking to use the money in the short to medium term. A retirement fund is exactly that-a fund for retirement and one has to understand that you have to wait until you are 65 or whatever the retirement age when you reach it. Money for other purposes should be put in appropriate account.

A stupid comment I did hear from someone regarding kiwisaver was, “You may not get it back.”

Kiwisaver will get the money at 65 but what gets my goat is that the person who masde this comment has very little in the way of assets so that whatever she spent the money on she never got it back. It is the same with people who spend x money on a nicotine or alcohol addiction; that is money gone forever, not to mention a shortened life span because of the health consequences of these addictions.

I wrote a post a few weeks ago about using your money as a seed to grow your wealth. Money if it is sown in the right places can reap a nice future harvest.

Happy investing!

www.robertastewart.com

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ATTENTION INTERNET MARKETERS

Internet marketers should take note

Those of us seeking a way to make money on the internet have seen all of those ads making some pretty rash claims of the amount of money it is possible to make online and have opted in to their mailing list then follows a series of emails trying to convince us of the benefits of what they have to offer but there are times when their emails are really just get on your nerves.

1-JOINING TOO MANY LISTS

Taking advantage of too many freebies on offer on the internet will get you on to a number of mailing lists which is really just frustrating when you are trying to clear out your email inbox. It all takes up too much time and the best thing to do is to unsubscribe or mark as trash. What I cannot understand is that many of these internet marketers appear to be offering free ebooks on behalf of other marketers and therefore creating competition for themselves. Talk about shooting themselves in the foot.

2-BEING SOLD TO

One thing I do not like is being sold to in a manner which comes across as being pushy. There are some who try to upsell on a product even while the sale process is going on. Would like to be upsold while you are at the checkout at the supermarket? What this tells you is that the marketer is only interest in your money.

3-ASKING FOR TOO MUCH INFORMATION

There are some people who are unwilling to give out their phone number online and if a buyer in unable to complete a transaction because they never filled out their phone number then they buy from someone else.

4-MAKING THE DOWNLOAD PROCESS COMPLICATED

I ordered something online, well I thought it was an ebook but it appeared to be a video which I had to join Warrior Plus, I think it was to access it then go through a complicated process which would challenge the mentality of Einstein. I found it overwhelming and so within 10 minutes of ordering the product, unsubscribed from this internet marketers list.

5-RUNNING A LONG SCRIPT

When I read the sales letter, if you could call it that, I want to know what it is your are selling, How much it’s going to cost me, and how it will benefit me. Reading through a long, long script trying to find out this information is a turnoff. I don’t want to listen to/read about your whole life story, just get straight to the point.

6-OFFERING INFORMATION AVAILABLE ON GOOGLE

Why would someone purchase information which is readily available by doing a simple google search? Yes it does happen, a lot and some of the information is quite expensive. Don’t give me that stuff about PLR rights because prospective customers will also do a google search to see if the same information is available for free.

www.robertastewart.com

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LIVING A BALANCED LIFE

How to live a balanced life

Learning how to manage your money and being smart with your resources will take you a long way in life but it is possible to go to extremes. A lot of people are up to debt to their eyeballs and they need assistance to break free of the borrowing habit which makes them a slave to their lenders. It is those people who are so tight with their money that they have lost all sense of priorities that this article is aimed at but even if you are not one of those people, you as we all are have room for improvement when it comes to how we priorities our spending or rather what we do not spend our money on.

It is what we Sacrifice that really determines what takes priority in our lives. There are moments in life which are just priceless such as spending time with your kids. How much value would you place on having an ice cream with your kid?

What I am saying is that, it is all very well being tight with your money but if it takes away what life should really be about then you need to reassess your priorities.

It is important that you not try to live a champagne lifestyle on a lemonade budget because you will end up working all the time without enjoying what you have.

Your age, marital status, and work situation will all determine your priorities in life as will your financial situation.

If you are young, you have more time to recover from financial mishaps, more so if you are single therefore are able to take more risks.

Someone in retirement may be advised to invested their money in something which can quickly be converted back into cash.

It is really up to each an every individual or family to prioritise what is important to them and decide what is worth making a sacrifice for.

I remember years ago, a man close to retirement age told me that his brother who was living with their elderly parents had 25k saved up in British pounds and told me his brother doesn’t enjoy his money. He was saying that he lived a sheltered life and never went anywhere.

Saving for your retirement is a good goal to have but you need to make the most of your stage of life. It is important to frame your life around your own circumstances, priorities, and your income level but at the same time not to live beyond your means.  You do not want to get to the end of your life thinking, “I wish I had done this or that”. If you love sports and have some talent in anything and have a dream to become an international sports person, musician or whatever then you may be advised to follow your passion before it is too late. You don’t want to get to the end of your life and say, “If only”.

It is a mistake to make money your number one goal at the exclusion of everything else because at the end of the day, life is more than money. What I am saying is that it is important to get your priorities in order but it is up to you to decide what is important to you. It’s your life, ENJOY IT!

www.robertastewart.com

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TURN DEAD MONEY INTO SEED MONEY

Turn dead money into seed money

Financial success is much easier than you think and is often just a matter of prioritizing your spending. The first thing to do is to find out where your money is going and where is disappears into the sunset never to be seen again. Much of this type of spending is dead money because you have nothing to show for it. You need to convince it to stay at home and work for you rather than fill someone Else’s pockets.

There are a number of money leaks which drain your finances so lets take a took at some of the main culprits.

INTEREST

If you have hire purchase loans, credit card loans, or bank or finance company loans then a good deal of your money is being spent servicing the loan. There is a cost to using other people’s money to buy stuff and that is called interest. In order to become debt free and save money, you need to decide on what youer priorities are and MAKE SACRIFICES. As painful as it may sound, you must do an audit in order to work out how much of your money in going in interest payments per annum.

If you are seriously in debt then talking to a budget advisor make sense.

STUFF YOU NO LONGER NEED

Everyone has stuff they no longer need just lying about around the house. This can all be considered “dead money”. Your stuff can be converted into cash and turned into seed money for your future wealth. Selling the stuff on ebay will give you some extra money to invest. You can then put this money to work for you.

HOBBIES AND SPORT

People will spend a fortune on their hobbies and the question of whether the amount you are spending on yours is going to affect your financial plans in the future. We hear of people who spend absurd amounts of money on whatever they are collecting yet when it comes to retirements savings bury their head in the sand. The money spent on this stuff is really dead money because it is not producing any wealth.

Sport is in a separate category altogether because being a participate in sporting activities promotes health and well being but you are able to minimize the amount spent so that what it is costing you does not get out of hand.

MONEY LYING IDLE

Money just lying in a low interest account earning just 2% interest is losing its value because when inflation and tax are both considered, it has lost its value and is worth less than 12 months ago. It all depends on what the purpose of that money is. If it is rainy day money then you may be better off investing it in Bonus Bonds where instead of being paid interest, you go into a draw to win prizes including a million dollar prize. It may be a long shot but at least you have a chance.

It all adds up during the course of a year. $4 or so for one cup of coffee per day does not sound much but if you buy say three cups of coffees per day that is $12 per day you are spending on coffee. That is $60 per week (5 days per week) and during the course of a year, that is $3,000 worth of coffee you are drinking. That could be your retirement savings or an overseas trip, or whatever you may prefer to spend your money on which you can see with your own eyes what your labours have paid for.

Learn to look at your spending on an annual basis because it does not sound like money money when you are paying for something in small amounts but like a dripping tap, leaks like this can add up to a lake. These little money leaks can then be used as your seed money to build your future wealth.

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WHAT IS YOUR RISK PROFILE?

Your risk profile-what is it?

Your risk profile is the level of risk you are willing to take when you make an investment! The higher the potential return on your investment, the higher the risk but the catch 22 situation is that just parking your money in low risk low return investments will inhibit your potential returns and could end up costing you in the long run. Taxation and inflation will eat away your profits so investing needs to be a balance between risk and reward.

Your risk profile is a big factor when deciding how you are going to invest and that has several parts to it so lets examine them.

1. YOUR AGE

When you are young, you are able to take more risks because you have more time to recover from financial setbacks but that is not to say you cannot be on the conswervative side if your circumstances warrant it.

It also does not mean that you cannot take risks when you are approaching retirement because chances are that you could live long after you retire.

2. YOUR GOALS

It would be madness to invest in high risk (growth investments) if you require the money in the short term, say within the next 6 months to pay for a wedding, new car, or whatever because the markets may be losing ground and you may end up with less money than you intended. Therefore for money you require in the short tern, invest conservatively.

3. PERSONAL MAKE UP

If the prospect of losing your money is going to cause you to lose sleep then lean towards more balanced investments. These are a combination of growth and conservative investments.

Your potential return will not be as much as it could be but at least you will sleep easy, albeit, at a cost.

4. YOUR FINANCIAL SITUATION

If you are up to your eyeballs in debt then clearing that debt has to be your number one priority and staying out of debt is priority number two then you can think about saving for whatever reason. Investing in the kiwisaver scheme is a very good investment for the reason that there are tax credits of up to $520 per annum and you are entitled this providing you invest a minimum of $1040. That equates rto 50% return on your investment, tax free. Where else will you get a return like that?

At the end of the day, it is your money you are investing and it is you who will bear the consequences for any financial decision make.

If you would like email updates from me then you can sign up here;

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

www.robertastewart.com