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Mastering Your Money: How to Set and Achieve Financial Goals

In order to get to where you want to go you have to know where you are going and this involves goal setting. Even if you do not set goals you will still end up someplace. Even those who ended up in the poor house started their journey someplace. Choosing where you want to go involves goal setting otherwise your destination will be chosen for you.

Setting financial goals 

Getting all of your finances in order takes a bit of give and take as far as deciding what you have to give up in order to achieve something else. If all our dreams came true we could buy anything we want when we want it but we do not live in our ideal world so we need to decide on what our priorities are.

In today’s world where getting one’s foot on the property ladder is unachievable for a lot of young people under their current circumstances that they need to find another strategy. They same rules apply whatever the circumstances and that is getting into the savings habit and investing money is important. If you are a New Zealander then I cannot stress enough how important it is to join the NZ retirement scheme kiwisaver. With all of it’s incentives such as the free government money and employer contributions this is a no brainer. Plus you will be able to use part of your kiwisaver for a deposit on your first home providing you have been with kiwisaver for five years.

If you are from another country then your retirement scheme will have different rules and schemes.

A multitude of factors will determine your financial goals but the main ones are:

YOUR AGE

If you are young then you have the luxury of time on your side and make time work for you. As the saying goes, “It is time and not timing which is the key to making money in the markets.” 

YOUR FINANCIAL SITUATION

If you are in debt then your number one priority needs to be getting out of debt especially if it is consumer debt. That is debt on stuff that you don’t need such as a TV set, lounge, videos, and other appliances. “If you don’t have the money to buy such items you don’t buy it,” is a good philosophy to have.

The money that is spent on luxury non essential items can be better directed to building your wealth. 

YOUR MARITAL STATUS

This is an obvious one but your marital status is a major factor in determining what your life goals are going to be because life is not all about you because there is another person in the picture; this means that you both have to be on the same page.

So how can I achieve my goals with x amount of money in my pay packet?

1 Increase your income

2 Reduce spending

3 Sell stuff you no longer need

INVEST YOUR MONEY

Invest your money, don’t just fritter it away like most people. An increase in your wages and salary should be invested unless of course you are living from paycheck to paycheck. Set savings goals with long term, medium term, and short term savings goals depending on what you are saving for. 

The time frame for when you require the money is a factor in determining where you are going to invest the money. You certainly would not invest in growth high risk high return stocks if you needed the money in the short term.

www.robertastewart.com

ABOUT THIS ARTICLE

In order to get your life and finances in order it is advisable to set goals. It is easier to set bite sized goals rather than set one big goal. It is easier for a marathon runner to set a goal of one mile repeated twenty six times rather than a goal to run twenty six miles.

Robert Stewart has his own website with articles on  mainly financial/money management on www.robertastewart.com

You may use this article as content for your blog/website, or ebook.

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Why Asset Class Diversification is Your Best Defense Against Volatility

Written by R. A. Stewart

When it comes to investing, it is important to invest according to your risk profile. This means diversifying your investments in several asset classes in order that you may take advantage of the highs in each asset class, and at the same time, minimizing the effect of a downturn in one of those asset classes. 

An asset class is a group of companies which have similar characteristics. They react to economic events the same way. A financial advisor will focus on asset classes as a way to reduce the risk and help investors to diversify their portfolio.

Each asset class offers different levels of growth and risk. Some asset classes such as cash in the bank are focused on capital preservation. 

Your choice of asset class has to be aligned with your investment goals.

Equities such as stocks and shares offer potential to make a good capital gain on your money, but are riskier than cash in the bank. 

Physical assets such as Real Estate and Gold offer chances to grow your wealth, but there are downsides to both. Investing in your own home may be a worthwhile investment for you but purchasing an investment property may not if it means that all of your money is tied up in that property. 

Your goals is the one factor which determines which asset class you are going to invest your money in. The question which has to be asked is, “What is the purpose of this investment?”

Once you have answered this question, you are left with your risk profile.

It is important to stress that you can have money invested in growth and conservative funds in different investments at the same time without it affecting your risk profile.

Here is an example:

A person in their twenties has 40+ years till retirement, therefore an appropriate investment for their retirement fund, (Kiwisaver in New Zealand)  is growth or balanced funds.

That same person may be saving up for a car and may have less than 12 months before they have saved enough for their purchase. Investing in conservative funds is right for them, though as they get closer to the time they require the money, depositing it in an ordinary savings account may be the best option.

Time is the major factor to consider when setting your money goals. The person who has time on their side is able to invest more aggressively into growth funds because they have more time to recover from a market downturn.

This does not mean that you should invest haphazardly, but rather taking calculated risks. The beauty of investing in managed funds is that your funds are invested on your behalf by fund managers and it is their job to ensure that your investment returns a profit. 

Cryptocurrency such as Bitcoin, Ethereum, and Dogecoin are an asset class, albeit, a risky one with the potential for high returns. If you are going to get involved in this then only do so with discretionary spending money. The same applies to investing in anything which is outside of your risk profile. 

You could be aged 70 or 80 but still fancy investing in growth funds. Do this if a market meltdown is not going to affect your lifestyle. New Zealand financial advisor Frances Cook has a formula for calculating what portion of your portfolio should be allocated to shares. You simply deduct your age from 100. 

I do know of some folk who do not follow this rule, and I am one of them. My view is that I may avoid the effects of a market meltdown if I followed Frances Cook’s formula, but then I am taking advantage of a buoyant market.

Its a decision investors must make for themselves and if it all turns to custard then you have only yourself to blame. 

About this article

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

Read my other articles on www.robertastewart.com

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Don’t let a cashless payment be an inconvenience

Written by R. A. Stewart

It’s a sign of the times when more and more businesses do not accept cash. This means that if you are on holiday, it is important to have a card which can be used for a tap and go with low bank fees. 

Most bank ATM cards will work on ATM machines in other countries ATM machines but each withdrawal will be costly and if you are using this form of payment for small purchases at the checkout in another country, your bank fees will quickly add up as you will discover once you return home on your overseas trip.

Using a debit card is a handy option. These work in much the same way as a credit card but with one difference; you are using your own money. Once your balance is used up, that’s it, you cannot spend any more than what you have in that account. It is just a matter of topping it up. 

The Wise debit card is one which I have recently joined. This is a travel card which can be a useful addition to your payment options where cash is not accepted.

When you sign up you require an ID such as a passport or driver’s license. You also need to verify your address. This is done using a utility or a rates bill.

Ordering your card is simple. Just log into your wise account and order it from there. It costs $14.50 ($NZ). You will receive your card within two weeks. 

While the  wise debit card offers numerous benefits, it’s not without its limitations. Availability may be restricted in some regions, limiting its accessibility to a global audience. Additionally, ATM withdrawal limits and fees may vary depending on the user’s location and the currency being withdrawn. However, these limitations are relatively minor compared to the overall value proposition offered by the Wise Debit Card.

Note Wise was previously called Transferwise.

Join Wise Here

Wise may not be for everyone due to different personal circumstances; therefore, discretion is advised. I may receive a small commission if you sign up for wise.

Www.robertastewart.com

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Reasons why investing outside of NZ Makes Sense

Written by R. A. Stewart

“Invest in several places because you do not know when misfortune will strike”-Ecclesiastes 11:2

Is advice given by Solomon and it is advice worth heeding because you do not know when a market downturn is going to happen. It could be the result of political turmoil, a natural disaster, or another pandemic.

When I talk about investing in several places, it does not only mean investing in several different companies, but rather investing offshore as well.

It is called diversification.

There are two main reasons why investing offshore makes sense.

  1. You have access to industries not available in your own country.
  2. You are able to buy into companies that lead the way in AI

There are global brands that you have access to when investing globally, some of these have given excellent returns over a long period of time. 

With such a larger pool full of world-leading industries and companies to invest in, you will have the opportunity for better returns.

On the other hand, New Zealand is a small country with an economy vulnerable to unforeseen events such as foot and mouth disease or natural disasters.

If foot and mouth took hold in New Zealand -it would likely result in the dollar plunging and more expensive imports. Tourism would most likely be affected, and GDP would fall to unprecedented levels.

There are other things which can affect our economy such as a trade war or a serious climatic event. 

It is a good idea to invest globally to mitigate the risk of exposure to a market meltdown in your country.

Check your retirement funds to see what percentage of it is invested globally. Even if most of your retirement fund is invested locally, you can still get involved in overseas markets on a shoestring.

One online platform for doing this is Hatch.

Hatch is a New Zealand based investment platform. If you are from a country outside of New Zealand then it will pay to check out those which are available in your own country.

Before you start  investing with Hatch or any other investing platform, it is important to know what kind of investments they have available and how they align for your investment goals and risk profile.

Invest for the long-term and avoid making short-term decisions based on emotion. Focus on your investment goals and above all be patient. Don’t get fixated on your balance. If you have invested according to your risk profile then your balance should not be a concern.

Smart investors mitigate the risk to their capital by investing in a diverse range of assets and industries. Investing in Hatch offers a gateway to global markets and a diverse range of investment opportunities. By understanding the platform, conducting proper research, diversifying your portfolio, and staying informed, you can potentially build a strong investment portfolio suited to your financial goals. Remember, investing involves risk, so it’s crucial to invest responsibly and stay informed about market dynamics and your investment choices.

Join Hatch here:

Invest in Hatch here

ABOUT THIS ARTICLE

The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook. Read my other articles on www.robertastewart.com

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How Sharesies is turning ordinary people into Investors

How Sharesies is turning ordinary people into Investors

Written by R. A. Stewart

When I was young there were limited opportunities to get involved in the share market. You had to save up a certain amount of money and invest it in your chosen company. In order to diversify you had to repeat that same saving up then investing process several times.

Then came managed funds where your money was combined with other investors which enabled you to have a diversified portfolio. Not only that but you have the opportunity to choose a fund according to the level of risk you are willing to take, whether it be growth funds, balanced funds, or conservative funds.

80% of Sharesies investors are under 40. There are benefits to getting involved in the markets from a young age. They are:

  1. Young people have time on their side and therefore are able to be more aggressive with their money by investing in growth funds.
  2. Young people have more time to recover from market meltdowns. The Share market is a long term game worth taking on board.
  3. Investing from a young age will increase an investor’s financial literacy and this is an experience which they can take with them into the future.
  4. Young people do not have as many commitments so have more discretionary money to invest into the markets.

If there is one habit which should be developed from a young age it is the habit of saving and investing. Making provision for your future needs is the responsible and mature thing to do. Indeed, it is a red flag when a potential life partner pays no attention to monetary matters. As they say, “Most marriages which fail, do because of financial issues.”

People do not change their spots overnight. If they give that appearance, it will only last until they have you and then he or she will revert to their old habits.

Now and again there will be a financial guru who claims that they made a killing on the share market and are willing to share their secret with you. What generally happens is that the person who made the killing will try to repeat the effort and end up losing their gains and a lot more. Then there is the fact that for every person who made the killing, a lot more tried the same thing and lost all of their money.

Experience will give you the wisdom to know when to take what someone has said with a grain of salt. 

Never allow the fear of making a mistake prevent you from investing. It is better than you making your mistakes when you are young because they will not affect you as much as when you are older and have more commitments.

As for Sharesies, I treat it as another string to my financial bow. Here is my strategy. I choose one New Zealand company to invest in per year and drip-feed money into this company every year. Some of the companies I have on Sharesies are Spark, Genesis Energy, Fletcher, PGG Wrightson, Fonterra, and Contact Energy. I have not decided on which company to invest in 2026.

Invest according to your own personal goals and circumstances and not what others are doing. It is your responsibility to set out your finances according to your goals and not what others suggest you should do with your money.

There are some great books on personal finance available. Frances Cook and Mary Holm are two New Zealand authors whose books are worth reading so if you can obtain a copy of their books then it will steer you in the right direction.

All the best with your investing.

ABOUT THIS ARTICLE

The content of 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 this article as content for your website/blog or ebook.

Read my other articles on www.robertastewart.com

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

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Tailoring Personal Finance to Your Risk Profile and Goals

Financial planning for your personal circumstances

Written by R. A. Stewart

“No one shoe fits all sizes” is a saying which is applicable to financial planning. No two people are the same. Personal finance needs to be tailored to one’s personal circumstances.

There are several factors which need to be taken into account when deciding what to do with your money. The one factor which covers all of your circumstances can be summed up in two words, “Risk Profile.’

Your risk profile is the amount of risk which you can comfortably cope with. “If there is a financial meltdown, would it affect your lifestyle?” is a question which needs to be asked, before you commit to investing in such and such.

Your timeline is one of the factors which make up your risk profile. The longer your timeline, the more time you have to recover from a market meltdown. When you are young you are able to invest more aggressively into growth funds, but that does not mean that you should invest every single dollar you own into growth funds because it all depends on what the purpose of the fund is.

You may be young and have some money invested in growth funds, some in balanced funds, and some in conservative funds.

Everyone has different goals and different living arrangements, which mean that your financial plan must be set according to your personal circumstances.

Setting goals is important. It gives you a destination to travel to. Without goals life will take you where it takes you.

There are three categories for goal setting:

Long-term goals (over 5 years)

Medium-term goals (1-5 years)

Short-term goals (up to 12 months)

A long-term goal can be savings for your retirement or a house deposit.

A medium-term goal can be saving for an overseas holiday or a car

A short-term goal can be saving for an emergency fund.

Growth funds are ideal for long-term savings goals.

Balanced funds are ideal for medium-term savings goals

Conservative funds are ideal for short-term savings goals.

Your tolerance to risk is a factor. There is no point investing in something if the possibility of loss is going to give you sleepiness nights. Having said that, successful investors learn to take a financial hit without losing heart. They learn the lesson and apply it to future investments.

During covid, the markets went through a bad spell. Many Novice investors switched from growth to conservative funds. The markets recovered and these investors turned a temporary loss into a permanent one.

The moral of this is to plan and stick with your plan because if you have invested according to your risk-profile then what the markets are doing should not be an issue to you.

People make different choices, some make right choices and others make wrong choices. It all leads to different outcomes. If you want a different outcome to what you have been getting then make different choices. It is as simple as that!

All the best.

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 this article as content for your blog/website or ebook.

Read my other articles on www.robertastewart.com

Explore Freely, Spend Wisely: The Ultimate Travel Companion

 

For the ultimate freedom to explore these incredible routes, get a Wise Travel Card. One card holds multiple currencies, letting you pay effortlessly in NZD for fuel, snacks, and accommodation. It automatically converts your money at the mid-market rate, saving you from costly bank fees. Top up and manage your funds instantly via the app, making it the smart, secure, and simple way to travel. Spend like a local and focus on the scenery, not the small print. Get yours and travel with ease.

https://wise.com/invite/dic/roberts10486

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Is Crypto Right for You? Essential Questions Before You Invest

Should you buy Bitcoin?

That is a question which YOU and only YOU can answer. It is similar to asking the question: should you buy lottery tickets?

It all depends on your personal circumstances and whether losing money in cryptocurrency will affect your lifestyle.

It is all a matter of priority. 

Any money used for buying cryptocurrency should be discretionary spending money. This is money used for entertainment purposes. It is your choice what you do with this money, but your choices can make or break you. 

Here are some questions which need to be asked first before you consider investing in crypto currency.

  1. Is this money better invested elsewhere?
  2. Do I have commitments which make investing in cryptocurrency inappropriate?
  3. Do I have any debts which need to be paid off?
  4. Do I have an emergency fund?
  5. Am I contributing to a retirement fund?
  6. Am I saving for that special something? (car, holiday, etc…)

There is a wide range of investments available for the average person so there is no excuse for not making the most of your money. These days, with so many investing apps available, ordinary people can get involved in the share market on a shoestring.

So the question has to be “Is this money better allocated elsewhere?”

Commitments are a big factor to consider. If you have kids then investing in cryptocurrency is just as inappropriate as going out to the pub until all hours. It is not just you and your financial goals you have to consider as well, and in particular, their future. 

It is also not appropriate to invest in cryptocurrency if you are in debt; as a matter of fact it is downright irresponsible and dumb. If someone is good enough to lend you money then you should be good enough to pay it back.

Investing in cryptocurrency must be done with discretionary spending money, but if you have debt then you do not have any discretionary spending money.

Do you have an emergency fund to fall back on when an unexpected expense crops up? This is basic common sense and the responsible thing to do. You just never know what kind of a curveball life is going to throw at you so being prepared will give you some peace of mind.

Joining a retirement scheme is something you must do if you have not already done so. There will be no one who reaches the age of 65 who will regret having contributed to a retirement scheme all of their lives. Your future self will thank the present you for contributing to a retirement fund all of your life.

The choices you make in the present will affect the choices which you have available in the future, so make good choices.

Finally, what you are saving for and your timeline is a big factor in where you invest. In the share market, investing in growth funds is for long term goals such as your retirement savings.

 Conservative funds are at the other end of the risk scale. These are for short-term goals.

What about cryptocurrency?

There is a fundamental difference between investing in growth funds and Bitcoin.

Growth funds and Bitcoin are both high risk, but high profit potential, but the difference is that Bitcoin is not only more volatile, but there are other risks such as hacking which can happen. Cryptocurrency has only a short history which means there is less data available to make decisions on its history. Not so, with the share market which gives investors the opportunity to spread their portfolio among several companies. This is called diversifying. An option not available to Bitcoin investors.

Investing in cryptocurrency should only be done with discretionary spending money, as another string to your financial portfolio. 

About this article

The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your website, blog, or ebook.

Read my other articles on www.robertastewart.com

 

The Bitcoin Investor’s Handbook is your essential guide to mastering the dynamic world of Bitcoin investment. This concise ebook by Robert Alan is packed with actionable insights designed for both beginners and experienced investors. Learn to navigate crypto volatility, understand the fundamentals of blockchain technology, and implement effective risk management and portfolio diversification strategies. The handbook offers clear explanations, real-world examples, and practical tools to empower you to make informed decisions. Discover long-term strategies and stay ahead in the ever-evolving digital asset market. Start building wealth and capitalizing on Bitcoin’s potential today.

https://robertalan.gumroad.com/l/ofvary

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The Benefits of getting into the habit of Investment

 

Written by R. A. Stewart

“A dollar saved is better than a dollar made because you don’t pay tax on a dollar saved”-Anonymous

Saving money from your wages is easily done for most people. It is a habit which can reap dividends in the long term. No pun intended.

A lot of people are good at saving money but have not got into the habit of investing.

In order to build up your wealth, it is imperative that you develop an investor mindset. These days in the internet age it is not necessary to be rich to invest, but you certainly need to invest to become rich.

Investing increases your financial literacy. The only way to become a good investor is to become one and with that experience will come knowledge. Reading books about personal finance is one thing but in order to turn the information you read into knowledge it is necessary to put into practice what is taught in those books.

I am keen to point out that not everything in personal finance type books will be applicable to your personal circumstances, but if you know where you are going then you will have the common-sense to discern which advice is applicable to your situation.

Becoming a good investor requires practice, practice, and more practice. To become a good investor requires an investor mindset. If you can handle the highs and lows of the markets and not panic when the market goes down. 

During market slumps we hear stories about people who changed from growth or balanced funds to conservative funds. A week or so later the market rallies and these people miss out on the rises which would have seen their retirement funds rise. It is a lose-lose situation for them. 

If you have chosen investments which are compatible with your risk-profile then the market volatility should not concern you.

“Inflation is the enemy of the conservative investor.”

In order to build your wealth it is necessary to take calculated risks. This is applicable in every aspect of life. Taking risks is not the same as being reckless or gambling. The key is to spread your money in different places. Taking a risk on making a killing by investing your whole life savings in one company is just stupidity, yet this is exactly what some people did prior to the Global Financial Crisis and the company went belly up. 

These people blamed others for their loss. 

“If it is going to be then it is up to me” is a rule to live by. This does not mean rejecting sound advice, but rather having the common sense to know whether the advice is good or bad.

At the end of the day, it is up to each individual to set up their own system for their finances, one that fits in with their goals and personal circumstances.

About this article

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

Read my other articles on www.robertastewart.com

Explore Freely, Spend Wisely: The Ultimate Travel Companion

 

For the ultimate freedom to explore these incredible routes, get a Wise Travel Card. One card holds multiple currencies, letting you pay effortlessly in NZD for fuel, snacks, and accommodation. It automatically converts your money at the mid-market rate, saving you from costly bank fees. Top up and manage your funds instantly via the app, making it the smart, secure, and simple way to travel. Spend like a local and focus on the scenery, not the small print. Get yours and travel with ease.

https://wise.com/invite/dic/roberts10486

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It takes Vision to make Provision

Written by R. A. Stewart

“Where there is no vision, the people perish.”-Proverbs 29:18

Financial planning takes vision. It also takes a bit of maturity and responsibility.

The choices you make today will affect the choices you have available to you tomorrow.

It is all about making provision for unforeseen circumstances and not all circumstances which you may find yourself in are unforeseen. 

If you have plans to get married and have children then that is not an unforeseen expense, therefore, if you are smart, you will make provision for such life changing events.

An unforeseen event is one where you have been injured in an automobile accident or were to have an accident at work.

For this reason it is important to set your finances up in such a way as to have some kind of cushion against financial shocks.

There is a scripture in Matthew 25:1-13 about ten girls. Half of them were wise and half of them were foolish. They were all invited to a wedding. The wise ones brought enough oil for their lamps, but the foolish ones did not. The foolish ones had to go back and get some more oil for their lamps and by the time they arrived at the wedding the door was closed on them. 

That was the consequence of not making provision for their journey. 

The wise girls made provision for their journey but the foolish ones did not.

There are consequences to living for today with no thought to the future. If you spend all of your wages within a week and are broke by the time the next pay day comes around you will always be at the mercy of lady luck. If an unexpected expense occurs it will be a great inconvenience to the broke person. A dental emergency, illness, accident, or a household appliance which we all take for granted breaking down can all occur.

Having some kind of emergency fund to take care of these is the responsible thing to do.

An emergency fund is considered short-term funds; that is, money you may require in the short term, therefore keeping this money in a low risk account is the best option for this type of fund. Investing in high risk funds, also known as growth funds, is not a sensible option. The last thing that you need is for the value of the fund to drop just when you need the money.

Your timeline is the key to finding suitable investments for your money.

Long-term money is funds which are needed after 5 years.

Medium-term money is funds which are needed from 1-5 years.

Short-term money is money which is needed within 12 months.

Discretionary spending money is what is used to feed these three categories. People who have debt do not have any discretionary spending money until that debt is paid off. As the proverb says, “The borrower is a slave to the lender.”

The bottom line is that it is essential that you control your money and not let money control you.

Certainly, the benefits of saving and investing your money cannot be underestimated. Building up your financial portfolio will give you more options in the future, but spending everything limits them. Investing will increase your financial literacy which in turn will help you to make better choices for your money.

About this article: The contents of this article are of the opinion of the writer and may not be applicable to your personal circumstances, therefore, discretion is advised. You may use this article as content for your website/blog, or ebook.

Read my other articles on www.robertastewart.com

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What should you do with an unexpected windfall

Written by R. A. Stewart

If you have suddenly come into a lot of money such as from an inheritance or a lottery win then the first thing you need to do is to get financial advice. This is certainly applicable to those who have no experience at investing. A financial advisor will also advise you of the taxation issues.

There are some basic rules to making the most of your windfall which I am going to share with you.

Rule number one: Know where you are going

If you have no clue as to what your plans are for the future then you are likely to fritter away your windfall with the result that you have nothing to show for it. I have seen it happen! Financial planning requires vision. Making provision for the future is the sensible and the responsible thing to do. It will make life easier knowing that you have the funds available when some unexpected bill crops up. 

A financial advisor needs to know what your intentions are with your windfall before they can help you. It is advisable to sit down with a pen and paper and write out your plans for the future. 

Rule number two: Get financially educated

Lack of financial literacy is the most common reason for poor financial outcomes. With so much information on personal finance available there is no excuse for financial ignorance. Books written by New Zealand financial advisors such as Frances Cook, Mary Holm, and Martin Hawes are worth reading. Your local library may have one of their books available.

Improving your financial literacy will enable you to make more informed choices when it comes to investing your money.

Rule number three: Know the risks

When there is an opportunity to make a capital gain there is also the chance that you may make a capital loss, but calculated risks must be taken with your money in order to put it to work. The key is to take risks which are compatible with your time frame. The longer your time frame the more risk you can take on. Having said that, it does not mean retired people should not invest aggressively in growth funds if they understand that a market meltdown will result in their portfolio taking a hit.

Rule number four: Take responsibility

It is up to you to take responsibility for your choices. This also means not blaming others when your investments are not performing up to expectations. It is also up to you to take responsibility for your own mistakes and learn from them. 

Rule number five: Don’t Leave your money in one place.

Diversify your investments according to your risk profile. This minimizes the chance of losing your money in one hit. This advice is more applicable in the internet age when millions of dollars are lost in banking scams. Don’t leave all of your money in an account which can be easily accessible online. It pays to have an account which is not connected to internet banking. This can be used for depositing large sums of money.

Rule number six: Invest your money

Inflation is the enemy of the conservative investor. Don’t just leave your money in an ordinary savings account; put it to work so that it is making you money. This does not necessarily mean you are taking unnecessary risks with your money. If you have a lot of money to invest there may be a temptation to invest in something offering interest rates at a much higher rate than the banks are offering. Do your due diligence with such offers. The higher interest rates on offer do not always reflect the higher risk which investors are accepting. This was the advice of some financial advisors prior to the Global Financial Crisis of the early 2000s. It fell on death ears as so many got their fingers burned with the collapse of several finance companies in New Zealand.

About this article

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

Check out my other articles on www.robertastewart.com