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Mistakes with Money

Written by R. A. Stewart

1 They make poor life choices

The difference between the rich and the poor is because their choices in life are different. There is a stark difference between what a rich person and a poor person does with their discretionary spending money. All of those satellite dishes on council estates tell a tale. A rich person will find ways to invest their discretionary dollar so that it multiplies while a poor person will spend all that they have and more when you consider the consumer debt that they take on. It is also a fact that the poor tend to have more children and having kids does not come cheap, so this further compounds their vulnerable financial position.

2 They do not save 

People in a poor financial state do not save money. They fritter away their money with no thought for the future. Their financial situation is made worse because of their poor lifestyle choices. They borrow for stuff which is not essential to everyday living and spend money on things of no lasting value and this leaves them with nothing to show for their labors.

3 They do not invest

Wealth does not increase when money is not invested. Instead it loses its value due to the effects of inflation. Investing gives you a financial education and this leads to better decision making when it comes to money matters. This in turn leads to better financial outcomes for the future.

4 They do not take risks with their money

Investing involves taking some risks with your money but this does not mean speculating which is really just gambling on some favourable outcome going in your favour. It is having a strategy of investing which enables you to make the most of what you have

5 They do not get financially literate

Lack of financial literacy is the number one reason why so many people are broke. Lack of ambition to rise above mediocrity is the main reason and there is little hope for the individual who lacks the will to improve their financial situation. I know that you are not one of those people otherwise you would not be reading this.

  1. They hang out with the wrong people

People tend to associate with like-minded people. You are the average of the person you spend most of your time with. You will learn money attitudes from whoever you spend most of your time with. 

  1. They have a poor attitude

Having a poor attitude to money is one sure way to live in mediocrity all of your life. When you receive a windfall do you invest it or spend it? Most people do the latter then accuse those who make the most of what they have as stingy. 

Having the will to improve your finances is one thing but putting it all into action is another. Reading books and investing some of your discretionary dollars is a starting point. It has never been easier for the person with limited means to invest in the share market with so many online investing plat forms. It is just a matter of having goals which align with your values. Having something to save for is what provides the motivation to save.

About this article

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

Read my other articles on www.robertastewart.com

Working in your chosen field

You may not have the talent or inclination to be an international sportsperson but you can be an asset in your chosen field and that does not mean that you have to be something out of the ordinary to become a valued member of society. A person who works at an entry level job can do so with such a good attitude that their diligence will not go unnoticed by their employers.

You may not particularly like your job and have any control over what happens at work but your attitude is something you can control. An employer with a bad attitude will take that bad attitude with them wherever they go. 

If you enjoyed this article then this ebook may interest you:

 

How to Enjoy Your Job

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The Benefits of Investing from a Young Age

The Benefits of Investing from a Young Age

Written by R. A. Stewart

To start your journey on to financial prosperity it is crucial that you start young if you want to get the full benefits of time. Here are three benefits of investing while you are young. This does not mean that investing when you are older will not have its own benefits. Investing money at any age will be beneficial and is better than having no savings whatsoever.

Here are the main benefits of investing from a young age.

  1. Time is your Friend

When you are young you are able to make time work for you. Money invested in the correct funds will multiply and increase its value. This is called compounding and it can really increase your wealth. Not only will your original investment keep producing a profit for you but the profits whether, that is from interest or dividends will be added to your original deposit and it too, will produce a profit for you.

  1. More Time to recover from financial setbacks

The markets can be volatile with shares going up and down like a yoyo, but with the benefit of time, young people have time on their side to ride out the storm. That does not mean that people who are just retired should not invest in the share market but rather they need to ask themselves this question, “How will the loss of this money affect my lifestyle?”.

It also does not mean that young people should invest all of their money in the share market. It all depends on what the money is going to be used for. If you need the money in the short term then you need to be a little bit more conservative with your investing.

The case I am making for the young ones to be a little more aggressive with their investing is that they may not be retiring for another forty years, therefore, taking advantage of capital gains which the share market offers can pay off.

3.It is better to make your mistakes early in life

People tend to make most of their mistakes early in life. That is no surprise since lack of experience often leads to errors of judgement, but as far as investing money goes, there are advantages in making your mistakes early in life. One is that you have fewer commitments, therefore, a mistake which can result in an investment going down the gurgler will not affect your lifestyle as much as it would for a person who has a family. Investing mistakes made early in life can be used to make better judgments in future. 

Investing early in life will enhance your financial literacy and will put your whole life ahead of you. There are opportunities to grow your wealth so grab it with both arms.

  1. More disposable income

As a young one you are likely to have more disposable income than someone who is older and with more commitments. If you are sensible, then investing your money will help grow your wealth. You are also likely to be in a position to take more risks with how you are investing your money, but that does not necessarily mean speculating on something which is a bit dodgy, but rather, taking some calculated risks.

  1. Habits formed early will make and break you

Developing habits which add value to your life and others will make and break you. One of these habits is the habit of saving and investing. These days it is easy to start a financial portfolio with so many investing apps available. It is just a matter of choosing one which is the right fit for your investing objectives. It is also important to set goals which align with your values and not be influenced by what your colleagues at work or your family say. It is your life and you are the one who has to live with your decisions so use the brain which God gave you and you will be better off in the long run. By all means, take note of financial advice as you will find in the business section of the newspapers but learn to develop the ability to discern whether advice is good or bad. Associate with people who have common sense. As the proverb says, “He who walks with wise men shall become wise, but a companion of fools will be destroyed.”

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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Fear of Loss will kill your chances of prosperity

Fear of Loss will hinder chances of prosperity

The fear of losing money will cause people to play it safe by not stepping outside their comfort-zone and not investing their money for greater returns. 

Leaving your money in an ordinary savings account will mean that inflation will erode the value of your money yet that is exactly what a lot of people do. They are afraid to take risks.

Some of this fear comes from those who had experienced the crash of 1987, better known as “Black Monday” when portfolios were hit hard. Some people lost their life-savings and more tragically, a lot of the money which went down the drain was borrowed money.

In these situations, shares were worth less than the money borrowed to purchase them.

There are risks which are worth taking and risks not worth taking. It takes discernment to tell the difference.

I remember once (about 2001) I bought shares in Air New Zealand and they almost went bust, well they would have if the government did not bail them out. The shares dropped to a low of fourteen cents a share. I bought my shares in the company at around $2 a share.

This was the last time I bought shares in an airline. It was an expensive lesson. 

I have known some people who never invest their money for fear of loss; they cannot handle the volatility of watching their balances go up and down yet they have no problem with buying their weekly lottery tickets. If they had deposited that same money into their kiwisaver then these people would have a fortune waiting for them once they reach the age of 65.

“You make your choices and your choices make you.”-Jim Addison, Scottish Pastor

It is all about choices.

The choices you make today will determine which choices you are able to make in the future.

If you have been sensible and joined a retirement scheme and contributed to it all of your life then this choice will give you more options in your later years.

Ask yourself these questions, “What action can I take today which my future self will thank me for?”

There will not be a single person who reaches the age of 65 or whatever the retirement age is in your country, who will regret ever joining  and contributing to a retirement fund.

It is everyone’s responsibility to get a financial education. This will help you to make right choices for your money. Apply what you have learned which are applicable to your personal circumstances.

Getting over your fear of loss will enable you to grow your wealth rather than just leaving it in the bank where inflation will steal the purchasing power of your money.

About this article

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

The contents of this article may not be applicable to your personal circumstances, therefore discretion is advised.

Read my other articles at www.robertastewart.com

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What are you Saving For?

What are you Saving For?

Written by R. A. Stewart

The ASB television ad asks the question, “What are you saving for?”

When you know the answer to that question it becomes your goal. It leads to another question, “Where to invest your money until it is needed.”

In the TV ad, a boy was saving up to buy his favourite girl a gift. 

Developing the habit of saving for something specific from a young age is a good habit to get into. It teaches young people to be smart and strategic with their money.

As we get older, the things we are saving money for are in the hundreds, then thousands of dollars. As they say, “The difference between men and boys is the price of their toys.”

Choosing the appropriate kind of investment for your savings goal is important and the number one factor to consider is your timeline.

If you are saving for something long-term then just leaving your money in an ordinary savings account is not a smart way to save because inflation will erode the value of your money. 

Long-term is 5 years and more.

If you are saving for the medium term then you can be a little more conservative with your investing because you don’t want to invest in something volatile and find that there is a market meltdown just when you need that money.

Medium-term is between 1-5 years.

If you are saving for the short-term then you may need that money within the next twelve months then you can take a no-risk approach and just leave it in an ordinary savings account.

Short-term is up to 12 months.

Here are some long-term, medium-term, and short-term goals which you may be saving for.

Long-term

Retirement fund (Kiwisaver in New Zealand)

Education fund

Home deposit

Medium-term

Saving for a car

Overseas holiday

Marriage and kids

Short-term

Your emergency fund

Money set aside for rates, power, and other household utilities.

Once you have classified which category each fund belongs to it is then a matter of choosing the correct investment for each fund.

In managed funds there are three categories of investment, growth funds, balanced funds, and conservative funds.

Growth funds are suitable for long-term investments because they can be volatile but at the same time have the potential to grow your wealth. Young people have more time on their side to recover from market crashes, therefore, growth funds are appropriate for them, but that does not mean that retired people should not invest in growth funds as long as you are aware of the risks and that a market fall will not affect your lifestyle.

Balanced Funds are suitable for medium-term investing. They are not as volatile as growth funds but you are still exposed to the share-market which means your savings have the potential to grow but not at the same rate as growth funds.

Conservative Funds are less risky. You have a little exposure to the share market but not as much as with balanced and growth funds. Conservative Funds are more suited to short-term investing.

An ordinary savings account is appropriate for money set aside for rates and other house-hold expenses. Making the most of your discretionary spending money and using it for your savings goals can help you achieve them faster. A person who is poor with their money will fritter everything they have and then borrow for things they need.

It is important to avoid becoming fixated with your balances in whichever funds you have chosen. Balances will bounce up and down. That is the nature of the markets. 

There are plenty of opportunities to invest in this day and age with so many online investing platforms available in New Zealand. Sharesies, Hatch, and Kernel Wealth are three which I personally use. If you are from the US then Robinhood is a well-known one over there.

About this article

The views expressed 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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Safety First: How to Protect Your Money from Debit Card Fraud

Debit card dangers

Written by R. A. Stewart

How to make the most of your bank’s debit card.

Having a debit card is a handy banking aid to have at your disposal. If you like buying stuff off the internet then you need some form of visa payment system to allow you to do this. Certainly not owning a debit or credit card in this day and age is a bit like not knowing how to use the internet and I have met a few of those people.

There are some rules which need to be followed if you are to make the most of your debit card.

You may not agree with some of what I am saying here but then again there may be something in this article which may be helpful.

Don’t do these things with your debit card:

  1. Don’t have your pay direct debited into your debit card.

If you do this then you are asking for trouble especially if you are buying and selling online because these sites will have your card details and all it would take is for one of these sites to be hacked leaving your card details to be exposed to fraudsters. I use my debit card for online purchases only. I deposit money into my debit card from my personal savings account. 

  1. Don’t use your debit card as a way to save money for your holiday, car, or anything else.

The most obvious reason for this is that your money is not earning any interest. There are better options available for investing your savings such as a personal savings account if the money may be needed within twelve months or an online share market platform such as sharesies or robinhood if you are investing for a longer term.

  1. Don’t leave your debit card lying around where anyone can pick it up.

This is the same as leaving your household keys lying about. If you are just using your debit card to make online purchases only then there is no reason to carry it around with you. Leave it in a safe place at home.

Contact your bank if you notice any deductions on your statement which you never made.

They will then cancel your card and order a new one for you. Take some form of ID with you when you do this.

I knew a lad who had $3,000 missing from his savings account so he contacted his bank. This lad had his debit card linked to his ordinary savings account on one of those overseas websites where you buy stuff. (It was not ebay). What they discovered was that the website was hacked which meant that his account details was exposed. 

In the end, the bank refunded his money. 

I told him that he was better off depositing a lump sum into an account which is not linked to internet banking.

Here are other ways of getting the most out of  your debit card

  1. When using your debit card at the checkout at a retail store choose “cashback” instead of visiting an ATM machine to avoid fees.
  2. Utilize app features to lock your card if it is stolen or lost to temporarily block certain transactions from taking place.
  3. For overseas travel use the wise debit card to minimize high foreign exchange fees which would have otherwise be charged on your bank’s debit card.

About this article

The 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

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Invest and Forget

Invest and Forget

Written by R. A. Stewart

I know a couple of people who have money invested in the share market and keep track of how their investments are going by checking up on their shares online just about everyday. I told them that I just invest in such and such and then just forget about them. 

For me, there is no point in worrying about how your share portfolio is going because what the markets are doing is out of my control.

If you have chosen where to invest your money and it is in line with your values, your goals, and your risk profile then what the markets are doing should not be a concern for you.

Financial experts will tell you that if you are investing for the long-term, 10 years plus, you should be a little more aggressive with your investing.

Some investors get panicky when the markets are down and shift funds. Then what happens next is that they miss out on the gains which would regained their previous losses, if you can call it that, because these are just paper losses. They are temporary, but if you decide to sell when your shares are down or switch to conservative funds then these losses are locked in.

Some investors change fund managers because their funds are not doing well. It is worth noting that past record is no guarantee of future performance, so even if a particular fund manager out performed all others this year it does not necessarily mean that they will continue this trend.

If you have chosen which fund type to invest in then how the markets are performing should not be an issue.

Your savings goals can be categorised in one of three goals; they are:

Long-term goals

Medium term goals

Short term goals

Long-term goals are money which is not needed for 5 years+. Retirement savings and house deposit savings are examples of long-term goals.

Medium-term goals are money not needed for 1-5 years. Saving for a car or the trip of a life-time fall into this category.

Short-term goals are money needed within 12 months. This could be your emergency fund set up for unexpected expenses such as an appliance or car breaking down. School expenses, etc.

There is no one shoe which fits everyone, therefore it is up to each individual or couple to set up their own financial plan according to their goals and personal circumstances.

Which funds are best for you?

There are three types of funds to choose from when you invest in a managed fund, also called mutual funds. They are:

Growth funds

Balanced funds

Conservative funds.

Growth funds have the most potential to grow your wealth but are the riskiest. They are for long-term investing. It is suitable for young people because they have more time to recover from a market meltdown.

Balanced funds are a combination of growth and conservative funds. They have the potential to grow your funds but are not as risky as growth funds. 

Conservative funds are safer than growth and balanced funds but are not as profitable. They are more suitable for short and medium-term investing depending on how much risk you are prepared to take on.

Once you have chosen where to invest your money, you should just get on with your life and turn your attention to other things. In other words, “Invest and Forget,” because what happens in the money markets is out of your control.

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 website/blog 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

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Dividend Reinvestment Plan-what it is

Dividend Reinvestment Plan-what it is

Written by R. A. Stewart

Some companies give their investors the option of accepting a dividend or have the dividend paid out in shares. This is called a DIVIDEND REINVESTMENT PLAN (DRP or DRIP).

This can be cheaper than accepting the dividend and reinvesting the money elsewhere. This kind of arrangement makes it easier for an investor to grow their investment and saves money because investing your dividends elsewhere will attract fees for the new investment

A DRP at work

You have opted into a company’s DRP and it issues a dividend. What happens next?

Those who have opted into the companies DRP receive their dividends in the form of extra shares, while those investors who have not opted into the DRP receive their dividends in the form of cash.

The way a company calculates its share price will determine how many shares you will receive. Its method of calculation is sometimes called the “Strike Price”.

The shares are distributed within the company which means that you as the shareholder saves money on transaction fees. This process occurs each time the company declares a dividend. Sometimes the company will stop the Dividend Reinvestment Plan for one reason or another and when this happens, its shareholders will be informed of this,

Is Dividend Reinvestment Plan Right for you

Only you can answer this question, because it all depends on your personal circumstances and your goals. If you are using the income you receive from shares, in this case dividends to pay for some of your expenses, health insurance, for example, then you will want to receive the dividends into your bank account. If you are a long term investor and do not need your dividends then you may choose to opt in to the Dividend Reinvestment Plan. If you are unsure, then speak to a financial advisor.

The downfall of DRP is that it could reduce your diversification. Your strategy could be to spread your portfolio over a range of shares. Reinvesting your dividends in certain companies can mean your investment becomes unbalanced and weighted toward certain industries.

Always keep in mind that whenever there is the opportunity for a capital gain there is also the opportunity for a capital loss, therefore, it is best to invest according to your risk profile. 

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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Build your Wealth with Diversification

The Art of Diversification

Written by R. A. Stewart

“Invest your money in many places because you never know what kind of bad luck you are going to have in this world.”-Ecclesiastes 11:1-2

Diversification means that you invest your money in several companies in order to manage your risk. We all know that from time to time a company will collapse, leaving those who invested in them out of pocket. We sometimes hear of cases where one or two investors had their entire life savings invested in such companies and got severely hurt by their loss.

The big mistake these people made was that they placed all of their eggs in one basket. They have only themselves to blame and no one else.

It is important to ask the question of “How will the loss of this money affect my lifestyle? And invest accordingly.

If you are investing for the long term, ten years+ for example then the share market drops should not worry you. These dips are only temporary and you should not view it as a loss but rather treat share market volatility as a fact of life and just get used to it.

Life has its own concerns without being overly concerned with how your portfolio is doing. If you have invested according to your risk profile then there is nothing to be concerned about.

No investment is entirely risk free but in order to increase your wealth then it is necessary to take risks but that does not mean gambling with your money which is speculating on a certain outcome. Investing means taking calculated and sensible risks. 

What is a sensible risk?

Investing in cryptocurrency for your retirement fund is not a sensible risk, it is a reckless one. However, investing in cryptocurrency as a side interest and with only discretionary spending money is fine as long as you understand the risks involved and the loss of your capital in this way is not going to affect your lifestyle.

The same can be said to investing in individual shares as an interest. I have a sharesies account where I drip feed money into individual shares in the share market. I choose one company to invest in per year and drip feed money into this company throughout the year. The share price will go up and down throughout the year and I will get shares at the lower price when they are down.

Investing your retirement fund in this way is considered to be “Placing all of your eggs in the one basket,” and is not recommended, but investing speculatively with your discretionary spending money can provide an added interest and an extra string to your financial bow.

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