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 Reasons why people remain Poor

 

Written by R. A. Stewart

People don’t just become prosperous for no reason, unless of course they win the lottery and for every person like that there are millions who didn’t win the lottery and go back to their mediocre lives until the next draw.

Here are the main reasons why people remain poor.

  1. Unwillingness to change

People tolerate their financial situation because they are more comfortable with it. They are unwilling to change anything in their life for fear that it will interfere with the routine which they have become accustomed to. Not doing anything about one’s financial situation despite the facts is just plain laziness. It shows a lack of ambition and there is no hope for people like that.

  1. Lack of Financial literacy

Lack of financial literacy is a major cause of financial struggles. This is an easy hurdle to overcome because there are lots of books on personal finance available you can read and you do not have to spend a lot of money to purchase such books. Your local library will have plenty of books on the subject. Frances Cook, Mary Holm, and Martin Hawes are New Zealand authors who have published excellent books on personal finance.

  1. They don’t join kiwisaver

Kiwisaver is the New Zealand retirement scheme. It is a scheme with several incentives such as the $520 per annum top up from the government. Not making any plans for your retirement years will almost guarantee that you will spend these years in poverty. “If you fail to plan, you plan to fail” is a saying which is worth remembering. Responsible people will sign up for a retirement plan of some kind. If you have dependents it is your responsibility to make sure you don’t leave them up the creek if something happens to you so don’t use that argument of, “I may not make it to 65.”

  1. They spend everything

Poor people spend everything they make and do not give any thought to tomorrow. Whether you like it or not, tomorrow always comes. People like this have no vision for the future. They can never see any further than next week’s pay day. If an unexpected bill arrives such as a car breakdown they borrow the money which means that the interest they owe on the borrowed money pushes up the cost of the repairs. It is the same when one of their kids needs a pair of new spectacles. People such as this always have money to spend on lottery tickets or alcohol but the really important things in life take a back seat. Some people would rather spend money on cigarettes than wholesome food for their kids.

  1. They don’t invest

Not investing is a sure fire way to stay poor because inflation erodes the purchasing power of your money if you just leave it in an ordinary savings account. Investing your money in managed funds increases your wealth and your financial literacy. 

  1. Wrong friends

Associating with people who are financially illiterate is another reason why some people remain poor. The poverty mindset of the group will infect you sooner or later. Some of the stupid comments made by some of these people regarding personal finance are not worth listening to. 

  1. Wrong choices

Making wrong choices is at the heart of the reason why most people are poor. It is not just choices in terms of personal finance such as joining KiwiSaver and investing which keep people poor but life choices such as having kids when not in a good financial position and living beyond their means. What you do with your discretionary spending money is a choice. Becoming financially sorted requires vision. Some of life’s most expensive items will arrive at some stage and the person with vision will prepare for these.

About this article

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

“Retire with Little Money” is your guide to achieving financial freedom, even if you don’t have a large retirement fund. This practical ebook reveals creative strategies and smart budgeting tips to help you retire comfortably on a modest income. Learn how to cut unnecessary expenses, boost your savings with side gigs, and make the most of the resources available to you. With easy-to-follow advice and real-life examples, this book shows you how to build a sustainable retirement plan without relying on a hefty nest egg. Start planning today, and discover how you can retire sooner than you think!

 

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

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Kiwisaver for kids: what you should know

Kiwisaver for kids: what you should know

Written by R. A. Stewart

Some people may be asking if they should sign their kids up for kiwisaver. My answer to that question is a resounding “Yes” though some people might have a different opinion.

Kiwisaver is New Zealand’s retirement scheme. Anyone who is a New Zealand resident or citizen can join and take full advantage of the incentives the government provides for members of kiwisaver. There is no age restriction. Anyone can join from newborn to those already in retirement. However, the incentives do not kick in until a child reaches the age of 18 and stop at age 65, the retirement age in New Zealand.

An under eighteen year old or over sixty five year old in employment can make contributions toward their kiwisaver through their wages; this could be 2%, 3%, 4%, or 8% of their gross wages but their employer has no obligation to contribute to their kiwisaver, even though some choose to.

There is the option of making voluntary contributions toward kiwisaver and this is something which a lot of people do.

What are the benefits of someone under eighteen signing up for kiwisaver?

There are many and the number one reason is that it will improve a child’s financial literacy. It will help them understand how the markets operate and why their kiwisaver balances go up and down.

Another benefit of kids joining kiwisaver early is that it will give their relatives an opportunity to contribute to their kiwisaver; this means that by the time a child reaches eighteen, they may have  a more than useful kiwisaver balance. 

It is possible to use some of your kiwisaver to purchase your first home but you have to have contributed towards the kiwisaver for at least five years. It is not known if the years prior to a member’s eighteenth birthday count. Generally, most home deposit withdrawals are made by those aged over thirty so it may not be such a big deal.

Those aged under 30 are able to access their kiwisaver for a rental bond. The bond is returned to the kiwisaver account after it is returned by the landlord.

The other ways kiwisaver can be accessed prior to turning 65 is in the case of a terminal illness or going overseas permanently. Many folk have made kiwisaver withdrawals due to hardship and this number has increased during the Global Financial Crisis but it should only be as a last resort.

Investors have to go through a lot of hoops in order to access their retirement savings prior to retiring. The purpose of kiwisaver is to build a nest egg for your retirement and to access it early really defeats the purpose of it.

Some people argue, “You can’t take it all with you,” or “I am young.” This kind of thing will lead to certain outcomes. You will be dead and leave your family with financial issues to deal with or you will be broke. The habit of saving money is a habit which will enable you to get the most out of life and the sooner this habit is formed the better off your kids will be in the long run.

Their future self will thank them for it.

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

Check out my other articles on www.robertastewart.com

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Book Review: Rich Enough by Mary Holm

Written by R. A. Stewart

Mary Holm is a New Zealand financial adviser who has written books on the subject of a personal finance nature for years and her book “Rich Enough? Is certainly a very good book with lots of down to earth information written in simple easy to understand terms.

There are several important points which she highlights and the first one is the importance of starting early. In fact the earlier you start the more money you will accumulate in the long term.

Starting early develops good savings habits which will in turn serve you well during your lifetime. 

The second point is to get rid of any debt you have as soon as possible and staying out of debt. If you are paying 10% interest on your debt then paying off that debt is just like being paid 10% interest on your money. It makes no sense to have money invested at 5% interest when you are paying 10% interest on your own debt. That money is better off in your pocket.

Falling into the Christmas trap can be costly as Mary points out. 15% of New Zealanders have more than 11 people on their Christmas shopping list to shop for and about 27% of them are women who plan to spend over $200 per person on presents. About 17% of people expect to spend over $1,000 on Christmas. Some suggestions on how to reduce your Christmas spending are given by Mary.

A section on New Zealand’s retirement scheme Kiwisaver tells of the excuses people provide for not joining and one of those excuses is “I have not got around to it.” 

This is stupidity according to the author, Mary Holm.

Another reason given is, “My grandma lost it all during the Global Financial Crisis.”

As Mary points out, these finance companies which went under during the GFC lent money to people who the banks considered too risky to lend to so they borrowed off the finance companies and paid higher interest rates. As a result, investors who lent money to these companies received high interest rates.

As the saying goes, higher return often means higher risk.

The importance of diversification is discussed as are the value of different types of investments. 

My rating: I rate this book a 10 out of 10 based on the fact that the information presented is applicable to everyone irrespective of their means. 

To find a copy, go online. Trademe, Ebay, and Amazon may have a copy for sale.

www.robertastewart.com

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Have you joined KIwisaver yet?

Now is a good time to join kiwisaver if you have not already

Written by R. A. Stewart

It is a good time to join kiwisaver if you are young and just starting out in the world. If you are over 30 and have not already joined kiwisaver then why not? Kiwisaver is the New Zealand retirement scheme. If you are in work you will get the equivalent of 3% of your gross wages from your employer deposited into your kiwisaver account. 2%, 4%, or 8% (you choose) of your gross wages will be deposited into kiwisaver and deducted from your pay. You can also make voluntary contributions to your kiwisaver account. This is an option used by those who are self employed or not in work.

The government’s contribution to your kiwisaver is what makes this a no-brainer. You will receive $520 of government money into your kiwisaver account but you need to invest at least $1040 to receive the full $520 otherwise the government contribution is 50% of your contribution. This is per annum; in other words you need to invest at least $1040 into your kiwisaver account per annum to receive $520 of government money every year.

The Kiwisaver year begins on July 1 and ends June 30 the following year. If you are on part time work and it looks as though your kiwisaver contributions are going to be less than $1040, you can make voluntary contributions to ensure your own contributions reach $1040.

In order to take advantage of the falling share prices you need to be in a growth fund or have some portion of your portfolio in a growth fund, otherwise called a balanced fund. If you are in a conservative fund then you are going to miss out on the market rebound. Financial experts will tell you that if you are in a growth fund then you need to leave it invested for at least five years. That way, if the market falls during this time there will be time for it to recover and recoup any losses which it has to be said are only paper losses.

Money which is needed for the short term such as a holiday abroad next year is considered short to medium term money. If you had this money invested in a growth fund you may find that your spending money for your trip has been depleted therefore, to reduce this from happening investing in something less risky is an option taken by a lot of holiday makers even though the return on this money is less than the inflation rate.

If you are prepared to take the risk then you might consider investing your short term money in growth funds in the hope of increasing your capital but it is important to understand that whenever there is an opportunity for capital gain then there is a chance for capital loss.

It cannot be stressed enough that it takes a cool head to live through the ups and downs of the share market and be relaxed about it. One thing you can always bank on is that the share market will go up and down. It is important to have a strategy in place to take this into account.

Diversification minimizes your risk. Diversification is when you spread your investment among several companies. One company might fall over but not the whole lot.

Some may argue that if you plunge all your money in one stock then you will make a killing; that is true, but you never hear of those who tried that and lost. If you are going to do that then it should be done independently of your main investments rather than risk your retirement savings going down the drain.

ABOUT THIS ARTICLE

The information in this article is of the writer’s own opinion and may not necessarily apply to your personal circumstances. You are advised to seek professional financial advice if you require assistance. You may use this article as content for your ebook or website. Check out my other articles on www.robertastewart.com

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Cost of living crisis affecting retirement savings

Cost of living crisis affecting retirement savings

Written by R. A. Stewart

Thousands of New Zealanders have suspended contributions to their retirement fund due to the cost of living crisis and this will affect them when their retirement comes around.

New Zealand financial adviser Carissa Fairbrother advised people to keep sowing into your kiwisaver whatever your financial circumstances. Look at where else you can make cutbacks because not investing into your Kiwisaver will affect you when you retire.

Kiwisaver is New Zealand’s retirement scheme; it is voluntary, unlike the retirement schemes of other countries which are mandatory.

There is a $520 tax credit per annum for contributions to Kiwisaver but to obtain this investors will need to deposit a minimum of $1040 every year. This is just like getting 50% interest on your money for the first year the money is deposited.

Anyone who is a New Zealand resident can join kiwisaver. There is no upper or lower age limit. People under the age of eighteen or sixty five and over are not eligible for the $520 per year tax credits. It is still a good idea to join kiwisaver despite this for several reasons.

The $520 tax credits or government incentives as they are sometimes called is paid out in July into your Kiwisaver. If you contributed less than $1,040 during the previous year then you will receive 50% of your contributions.

The Kiwisaver year begins on July 1 and ends on June 30. It makes sense to check your contributions during the year and to make sure that you deposited at least $1040 by June 30.

One is it will give the young ones a good start to life as far as savings are concerned and it will also give them a good education in finances. 

For those aged 65 and over, it is still a good idea to keep contributing to your kiwisaver if you are not going to be using it in the short term.

Buying your first home

If you are purchasing your first home you may be able to use some of your kiwisaver for a deposit. It is all the more reason to start saving as early as possible as it will enable you to reach your goals quicker.

There are other circumstances where you may be able to access your Kiwisaver early. These are if you have a terminal illness, you are moving overseas permanently, or due to financial hardship. There are lots of hoops to jump through before you can access your money.

It is all the more important to have a rainy day fund when everything is going well for you and not just fritter away your discretionary spending money because things do go wrong in life.

It is never too late to join Kiwisaver, you can still join even if you are 65, though you are not eligible for the government incentives. It is still worth your while joining. It is a good way to play the share market.

You are never too young to join kiwisaver. You may not be eligible for the government incentives until you are 18 but joining early then having family members make contributions while you are still at school will give you a good financial platform for the future. Who knows, a rich uncle may leave you a sum of money in his will to be deposited into your kiwisaver.

About this article

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

www.robertastewart.com

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Your Investing Risk Profile is an Important Factor

Working out your risk profile

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

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

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

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

Your Age

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

Your health

Your savings goals

The key strategy whatever your risk profile is diversification.

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

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

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

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

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

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

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

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

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

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

www.robertastewart.com

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The difference between assets and liabilities

ABOUT THIS ARTICLE

Knowing the difference between real assets and real liabilities and then setting your financial goals accordingly can be the difference between getting yourself financially sorted or the poorhouse. It underlines the value of financial literacy in helping achieve your goals.

The difference between assets and liabilities

Written by R. A. Stewart

An asset is something which pays you money while an asset is something that costs you money.

So let’s look at some examples.

Is property an asset or a liability?

Some people may say it is an asset because it is something you own, however, if you owe money on that property and are not getting a return on it then it is a liability because it is costing you money.

Is it an asset if you are receiving rent from that property?

Only if you are making a profit.

Some people would not agree saying, “The property is increasing in value over time.”

Lets not forget there are rates to pay plus maintenance costs and insurance to pay on that property so it could be costing you money in the long term but you will have to sit down and do your homework. 

Other investment times are less complicated such as the sharemarket so lets look at other investment types which are assets. 

Assets

Your retirement fund

Mutual Funds, also known as managed funds

Other investments

Business or farm

Learn to invest your money in items that can be quickly converted back to cash; some investments do not allow you to quickly turn the asset back into cash without jumping through several hoops.

Liabilities

Any item which has money owed on it and this is your form of transport, however there are circumstances where it may be an asset such as if the vehicle is used as a taxi, which therefore makes it an asset as it is producing an income. Such costs and the money owing on the vehicle can be tax deductible. The same applies to any vehicle used in a business.

Even though a vehicle used for work and business purposes may be classed as an asset, the money owed on that vehicle is a liability and will go into the accounts as such.

The reason why so many people are in such a poor financial state is that they borrow for stuff instead of saving for it and therefore pay more for that item in the form of interest payments.

A pet can be classed as a liability if it is costing you an arm and a leg to keep. Think of a dog for example; I read somewhere that it costs $20,000 to keep a dog during its lifetime. That is not just the food but vet bills and the like. A dog can be classed as a liability.

Do a stock take

Before you know where your money is going you need to do a stock take of all your spending. Your number one priority has to be the elimination of debt and plug up those leaks in your spending that is costing you money. In this way you will know where to make savings and redirect that money elsewhere.

Your task needs to be to reduce liabilities which means reducing debt then once you have savings use it to build your wealth. This involves setting goals which will increase your wealth and not send you to the poorhouse.

There are a number of share market platforms where you are able to drip feed money into the markets. Take advantage of these as they are a great way to build your financial literacy.

ABOUT THIS ARTICLE

Accumulating assets instead of liabilities will lead to a more prosperous future. It is vital for investors to know the difference between the two. In this article Robert Stewart explains this difference. Check out his blog at 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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What is discretionary income?

What is discretionary income?

This is a question which is important to those who want to balance their household budget. As most people know there are two categories of spending; your needs and wants.

Here is a list of expenditure which can be classed as needs.

Power/heating

Rent/rates

Food

Car expenses

Clothing

Loan repayments

Savings/investments

Some of these items you have some control over. For example you have the ability to choose how much you spend on food. The same is with clothing. You have the option of shopping around for something affordable. You also have control over how much power you use.

Wants are items which are not essential but are optional. Here is a short list of items which are wants:

Holidays

Hobbies

Entertainment

Gambling

Alcohol

Cigarettes

It is what you do with your discretionary spending money which will make a difference to your financial outcome. If you use your money as a seed for your investments then money worries can be a thing of the past. Dental and Medical bills are not cheap and the wise person who sets aside funds for a rainy day can pay for these emergencies in full.

Your personal financial situation will determine what you do with your discretionary spending money. If you have your life ahead of you then you may have more disposable income after your bills have been paid. If you are older you may not have as much disposable income but have more savings behind you.

If you have consumer debt then you do not have any discretionary spending money. Your number one priority as far as your finances are concerned is to pay off that debt. 

It is not how much you make which determines your financial outcome but what you do with how much you make. Some people spend all of their discretionary spending money and are left with nothing until the next pay day.

Here are some stories:

When I was a teenager we were helping a neighbour build a cattle yard on his farm. My father said to the neighbour, “There is no profit in having the best looking cattle yard.”

What he means is that having the nicest looking cattle yard is not going to make any difference to the bottom line profit of the farm.

Years ago, a colleague bought a car for twenty grand. When one of his friends told me, I replied, “If that was me I would have just bought the cheapest car and invested the rest of the money”.

An expensive lifestyle proves costly in the long term. Those who have developed the habit of living modestly are better equipped to deal with the cost of living crisis.

At the end of the day you make your choices and your choices make you.

About this article

The information in this article is of the writer’s opinion and experience and may not be applicable to your personal circumstances therefore discretion is advised.

Disclaimer: Please be aware that if you sign up for sharesies or coinbase through my site then I may receive a small commission.

www.robertastewart.com

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Your goals and investment strategy

Here is an article I posted on the site three or four years ago. If you are not from New Zealand then Sharesies and kiwisaver may be foreign to you. Sharesies is a share trading platform similar to Robin Hood in the US. Your own country may have its own version of Robin Hood and Sharesies.

Kiwisaver is the New Zealand retirement scheme with its own unique incentives to encourage people to contribute. Your own country will have its own scheme with its incentives.

Your goals and investment strategy

The type of investment you place your savings in all depends on your goals and the time frame 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 share market 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 a 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 provided 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 have read my previous posts about explaining Sharesies, you can sign up on the link below;

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

ABOUT THIS ARTICLE

This article is of the opinion and experience of the writer and may not be applicable to your personal circumstances. Seek independent finance advice if you require it. Feel free to use this article as content for your ebook or website/blog.

 

www.robertastewart.com

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Investing facts of life you must accept

Investing facts of life you must accept

In every aspect of life there are some cold hard facts that you need to get your head around. Investing your savings is no different. Here are seven facts of life when it comes to investing. Understand these and you will be better equipped to make better choices.

  1. Whenever there is a chance for a capital gain there is also a chance for capital loss

Whether you like it or not, if an opportunity for a capital gain arises then there is also the chance for a capital loss. It is easy to invest when all is going well and the money you have invested has grown but most of your capital gain will come when you are investing while others are selling. It requires patience and self control to stay with your financial plan when the markets are heading south. Your financial plan has to take into account the possibility of a bear market therefore, invest according to your timeline.

  1. It is time not timing which is the key to growing your wealth

The key to prosperity is to start saving early. Once you get into the habit of saving and investing from an early age then things will become easier for you years down the track. Saving a portion of your income means living within your means but that does not mean that you have to be very stingy. It means not frittering away your spare cash on items which are not going to help you financially in the long term. If you are on the verge of retirement or already retired then you have less time to recover from financial setbacks therefore cannot be as aggressive with your investing as the young ones but that does not mean that growth funds are out of bound but rather just balance your strategy depending on how soon you are going to use the money.

  1. Your investments are your responsibility

You may be using a financial adviser to deal with your investments but they are still your responsibility because an adviser cannot think for you; it is up to you to set your own goals which match your personal situation. It is then up to you to tell your adviser where you wish to invest your money. Some investors like to have someone to blame and during a market downturn the first person to blame is their fund manager. In the case of retirement schemes such as the New Zealand Kiwi saver, investors have the choice as to whether to invest their money in growth, balanced or conservative funds. If balanced funds are chosen then there is the choice of what percentage of your savings will be invested in growth funds. Balanced funds are a mixture of growth and conservative funds.

  1. Value is determined by what others are prepared to pay for

Have you ever stopped to ask yourself the question, “What will this be worth in x years time?” The answer is quite simple!

What gives something value is what others are prepared to pay for that item whether it is a painting, someone’s stamp collection, shares in a particular company, cryptocurrency, property, gold, or whatever. 

None of us can know for certain what the market will do, therefore we take calculated risks based on our knowledge and expectation. 

As with anything in life there is no guarantee but if you do your homework and put a bit of thought into your strategy then you can have a nice nest egg to call upon when you need the money.

  1. Life is one big pyramid

One fact of life you need to accept is that life is like a pyramid. Using sport as an example; few ever make it to the elite level, comparatively few that is compared to the numbers taking part. It is the elites who make the most money, then as you go down to each level there are more and more participants. At the grass roots level you will find the highest number of participants, these are the sports men, women, and children who take part in sport for no other reason other than the enjoyment they derive from their chosen sport. 

If you have the ability to make money from your sport then it certainly will pay to have a backup plan by adding another string to your bow.

As for investing, well, there can only be one Warren Buffet, Robert Kiyosaki, or Anthony Robbins. It is important that you be the best at being you and not try to be a second rate version of someone else. Your personal financial choices must be what is applicable to your own circumstances.

 

  1. Life is all about percentages

Most people have played the lottery and most of us whether we have played it or not have heard about the absurd amounts of money which some lucky lottery winners have won; sometimes running in the millions. There is something which you must understand and it is this; For every person who won the lottery there are countless thousands who have lost their money trying the same thing. This is also true of many aspects of investing. You may have heard about someone who made a killing on the share market, on bitcoin, or some other investment but you seldom hear of those who lost everything while trying the same thing. My advice to those who are thinking about taking on high risk investments is to only do so with discretionary spending money and not with your retirement savings or money set aside for a house deposit or a car.

  1. Life is a numbers game

In life you cannot expect to win every single time. That is unrealistic. But making mistakes is just part of the learning process. The fact is that the more mistakes one makes the more likely one is going to win. Some people avoided risk after the 1987 sharemarket crash having got their fingers burned during Black Monday. 

If you do not take risks then nothing may happen to you but then you will also miss out on some of life’s experiences. When it comes to investing you need to take some kinds, albeit calculated ones in order to get ahead of inflation and the cost of living, otherwise the value of your money.

www.robertastewart.com

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