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Dividend Yield and what it means

Dividend Yield and what it means

Written by R.. A. Stewart

A commonly used term in the share market is “dividend yield,” but what does this term actually mean? Some novice investors will be asking themselves but are too afraid to ask others for fear of revealing their ignorance.

The dividend yield is a stock’s annual dividend payments to shareholders as a percentage of the stock’s current price. This figure is often used as a guide to a stock’s future income based on what is paid for the stock.

An example would be, if a stock sells for $10 per share and the company’s annual dividend is 50 cents per share, the dividend yield is 50 cents per share. The dividend yield is 5%. The formula for working this out is annualized dividend divided by share price equals yield. In this case, 0.50 cents divided by $10 equals 5%.

A stock’s dividend can change over a period of time. It may be due to the natural volatility of the markets or changes in the yield by the issuing company. The yield is not fixed and can be changed.

The dividend yield shown on some websites may not be accurate because it has not been updated. One week can be a long time in the markets.

To calculate the annual dividend paid out by a particular company per year you need to multiply the amount of a single payment by the amount of payments.

Keep in mind that whatever yield a company pays out, it is not a guarantee that they will continue to pay out at the same rate in the future. The old adage “Past performance is no guarantee of the future” rings true.

It is important to note that a higher yield does not on its own make a great investment. If the company is struggling then there is a risk that they may not pay a dividend to its investors.

The capital gain of a stock is the other main factor in a stock’s performance. Investors who purchase a stock for the long term are often purchasing for capital gains and this has proved successful.

The high dividend yield may be high due to the falling stock price; otherwise known as a “Dividend trap”. There is a good chance that dividends will be cut in such circumstances.

One retired couple I know uses the dividend payouts to pay for their health insurance. If you are in this position then choosing stocks with a high dividend yield may be the way to go. It is important to diversify and choose a wide range of companies to invest in.

If you do not need the income from the dividends then reinvesting is a good option. It will help to increase the value of your portfolio.

About this article

The information in this article is based on the writer’s experience 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.

Www.robertastewart.com

 

Investing with Sharesies

Investing with Sharesies is an accessible and straightforward way to invest in the stock market, you can get started on your investment journey and start building your wealth. However, before making any investment decisions, it is essential to do your research and seek professional advice if necessary.

 Join Sharesies here

Disclaimer: I may earn a small commission if you sign up with Sharesies.

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Book Review-Your Money, Your Future

Written by R. A. Stewart

There are a number of books on personal finance on the market and one of these is “Your Money, Your Future by New Zealand financial advisor Frances Cook. In this book Frances provides practical advice and tips on managing your finances and how to formulate a strategy for achieving financial independence. There is no size fits all when it comes to designing a life and Frances makes allowances for that. Here are some interesting points from the book which I want to share in this article.

  1. To calculate what percentage of your money should be invested in shares, deduct your age from 100. For example; if your age is 65 then 35% of your money should be in shares. I think that the majority of investors probably have a higher percentage of their money in shares than this formula suggests. It is really a case of your timeline as far as when you are going to use the money.
  2. Putting your money into a savings account may feel safe to some people but over a period of time that money is losing it’s value because of inflation. Your money has to outpace inflation and it won’t do that in a savings account. Only your emergency cash fund should be kept in a savings account and money used for utilities and everyday living costs.
  3. The rule of 72 explains how quickly you can double your money. It goes like this; simply divide 72 by the average rate of return on any investment. If the average return is 7% then it will take you 10 years to double your money (72 divide by 7).

This is the magic of compounding interest. This is all assuming that you do not take your profits but rather allow them to be added to the principal so that you are earning interest on interest.

  1. You cannot beat the market so buy the whole thing! Frances talks about diversification here and explains how this approach beats trying to time the market every time. There is a saying, “Its time and not timing which is the key to making money on the share market.”
  2. Retire to something not from something. Frances points out that life needs to have a purpose otherwise it will be meaningless. You have to have an end goal in sight for when you finish work. Your retirement plan does not have to involve spending, it could be spending more time with the family or gardening.

You may be able to find the book, “Your Money, Your Future” by Frances Cook on Ebay or Amazon if you live outside of New Zealand. In New Zealand, the Trademe auction site may have copies.

I have read a lot of books on investing and this one is one of the best. It contains several gems of advice relating to personal finance. Whatever your personal circumstances are, you will find this book helpful in pointing you in the right direction.

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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Share Tumble Scenario

INTRODUCTION

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

What to do if the share market crashes

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

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

So what should investors do when the markets are falling?

Here are my 5 tips:

1 KEEP CALM

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

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

2 STICK TO YOUR FINANCIAL PLAN

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

3 DON’T TRY TO TIME THE MARKET

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

4 KEEP SAVING AND INVESTING

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

5 LISTEN TO THE RIGHT PEOPLE

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

www.robertastewart.com

ABOUT THIS ARTICLE

Feel free to print this article for easy reading. You may use this article for content for your website or ebook. Visit my site www.robertastewart.com for other articles.

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Investing for seniors

Investing for seniors

Written by R. A. Stewart

 

Your age is a crucial factor in establishing your savings and investing strategy. Your 20s, 30s, 40s, and 50s are your savings years. It is these years when you build up your assets. 

Your 60s and 70s can be considered your spending years. It is when you tick off items on your bucket list while you are able to.

That does not mean that you do not have to work, a lot of older people are taking this option, not because they cannot make ends meet on their pension, but because they enjoy what they are doing.

In New Zealand, retirees will have access to their kiwisaver account once they reach the age of 65. Money invested in kiwisaver will be in growth, balanced, or conservative funds. Most people during their working life opt for growth or balanced funds.

It is time to decide whether to stay with the status quo or invest in more conservative funds. 

Your age and your health are the two most important factors in deciding which fund to invest your money in. 

Older people do not have time on their side to overcome financial setbacks such share market falls and so forth, therefore if you are 60+ it is a good idea to lean toward more conservative investments but still retain some exposure to risk.

It is worth mentioning at this point that New Zealand financial advisor and writer Frances Cook has a formula for calculating how much exposure you should have based on your age, and it is this…

Subtract your age from 100.

If for example you are aged 60 then only 40% of your portfolio should be invested in the share market.

I do not necessarily agree with this formula and my exposure to the share market is more than her formula suggests I have.

However, that is a personal choice; one that I do not necessarily recommend to you because your circumstances will be different as they are for different people.

If you are connected to the internet and you have a lot of spare cash in your account then I suggest that you place most of your money into an account that is not connected to internet banking. This is to reduce your chances of becoming a victim of internet scammers. 

With internet banking being the norm, this could be difficult in the future though.

In any case I still believe that it will pay to arrange your finances so that if you fall victim to a scammer then not all of your money will be lost. 

Don’t leave all of your money in the one account for goodness sake as some victims of scammers have.

If you are traveling then make sure you don’t have access to your life savings because if you do then so will be a scammer if they manage to get hold of your login details. What I am trying to say is you should leave your entire life savings in an account which you use to do your daily spending. Keep it in a separate account from the account you do your day to day banking. The 

Scammers have all kinds of ways to trick people into handing over their login details.

Anyone can be a victim so don’t be proud by saying “I am not that stupid.”

As you get older you will have to invest more conservatively; that does not necessarily mean transferring from growth to conservative funds but investing some of your current savings into low risk accounts. The deciding factor is your timeline. How soon you need the money and funds which are going to be used within 12 months are best invested conservatively.

 

www.robertastewart.com

 

ABOUT THIS ARTICLE

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

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Beginners Guide to the share market

You do not have to be rich to get involved in the share market these days with online share market platforms such as Sharesies and Hatch which provide a gateway to novice investors.

If you are from a country other than New Zealand or Australia then Robinhood from the States is a share market platform which you can use.

Here are my tips to follow if you are a complete beginner.

Tip 1: Shares go up and down

The value of your shares will fluctuate; that is the nature of the markets. It is important not to focus on your shares but rather on saving and letting the markets take care of itself because if you are strategic with your investments then falling markets will not scare you. 

Tip 2: Know why you are investing

Have a clear plan on what the money’s for. Is it for your retirement, a mortgage, a vehicle, or as a rainy day fund. 

Tip 3: Invest money you can afford to lose

Money which is invested in the share market should only be money which you can fully afford to lose because of the volatile nature of shares, however, you can choose a conservative funds when investing in managed funds. It all depends on your time frame. If the money is needed in the short term then investing in conservative funds will be your best option. 

Tip 4: Know your risk profile

Your risk profile is the level of risk you are prepared for or are willing to take. If you are young you are able to take more risks because you have more time to recover from financial setbacks.

Tip 5: Not a substitute for kiwisaver

Online investing  platforms such as Robinhood, Sharesies, Hatch and the like should not be a substitute for your retirement fund, in New Zealand that is called Kiwisaver)

Tip 5: Not a get rich scheme

Investing in the share market is a long term game; it is not a get rich quick scheme. Don’t be taken in by the stories of those who have made a share market killing because you never get to hear about the losses and it is likely that people who made that killing will spend years trying to make another killing and lose all their gains.

Tip 6: Patience is a virtue

It is time and not timing which is the key to making money in the share market. Patience investors are rewarded handsomely if they stay onboard rather than jump ship during stormy seas.

Tip 6: Do your homework

It is important to do your homework on the various companies you plan to invest in and not just invest haphazardly. The alternative is to invest in managed funds; the fund manager will choose the companies for you.

Tip 7: Take responsibility

Don’t blame anyone for your mistakes, take responsibility for them and learn from them; that way you will become a better investor.

Tip 8: Get right advice

Listen to the right people. Prior to the Global Financial Crisis, some financial experts were saying “The high interest rates do not reflect the higher risk investors of finance companies are taking on.”

Well guess what happened? A number of them folded.

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

Disclaimer: I may receive a small sign up bonus if you join sharesies.

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Investing with online share market platforms

Share market tips for the Mum and Dad investor

Written by R. A. Stewart

I think it is fair to say that a lot of people dream of hitting it big on the share market and some do but for everyone who has found a pot of gold in the markets there are countless others who entered the markets blindly without doing their homework or having a strategy in place; this article is to give you some pointers if you have some money to spare and are looking for somewhere to invest your hard earned cash.

In the share market, as in real life, if you are able to reduce your number of bad decisions then you will be better off; not that there’s anything wrong with making mistakes.

You are sometimes better off by learning a lesson the hard way if that is what it takes for you to get the lesson. 

Here then are my share market pointers.

1 Investing directly into the share market is beyond most small investors because their ability to diversify their portfolio is limited therefore the only option is to invest all of their funds in one company which leaves them open to disaster. If that particular industry which the company is involved in suffers a downturn, value of the share heads south. It is similar to a horse racing fan attending the track and betting all of their money on the one horse instead of dividing their bankroll between several horses.

Small investors are able to invest in the markets, however, and enjoy the same benefits of larger investors by investing in managed funds; this is where your savings are combined with other investors. You do not have the choice of which companies to invest your money in as that decision is left to the trust manager, however, you can choose which type of fund to invest in whether growth, balanced, or conservative.

2 Investing in the markets is a long-term game, therefore, if you require the money in the short term then you may be better off leaving your money in fixed term interest bearing accounts however, having said that, investing in the markets can increase your savings if you give it enough time. Young people have the advantage of time on their side; they are able to take more risks with their money because they have more time to recover from financial setbacks than their parents.

3 Don’t try to time the markets! It is time and not timing which is the key to making money in the share market. If you are waiting until the markets dip before investing you are missing out on plenty of opportunities to increase your capital and this is particularly true in a rising market. 

4 Decide whether the money is required in the short term, medium term, or long term before deciding on where to invest your money. 

Money needed in the short term or on standby is money which may be needed for car repairs, a holiday, household expenses etc

Medium term funds is money needed for a new car

Long term funds are savings for your retirement such as your superannuation funds.

Short term is not money which should be invested in bank deposits where you are able to have easy access to it.

Medium term money can be invested in managed funds where you are able to have easy access to it but still have the potential for it to grow.

Long term money is money invested in a retirement fund such as kiwisaver in New Zealand.

Conclusion

Think of money as “seed,” it will reap a nice harvest if you give it enough time, therefore you need to sow enough seed in order to increase your wealth; the share market is an excellent investment and managed funds makes it easier for the ordinary person to get involved in the markets. My site www.robertastewart.com has articles to help you increase your wealth. CHECK IT OUT!

Start investing on a shoestring

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

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

 

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

#sharesies #kiwisaver #savingmoney #sensibleinvesting #sharemarket 

 

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Share Price Consolidation

Share consolidation-what is it?

Written by R. A. Stewart

One term you do not hear very often is share consolidation. It is a term seldom used because not many companies have used this as an option. This article sheds more light on the term. Hopefully I have explained it well enough in terms that even the novice investor will understand.

Share market price increase may be misleading

If you are a casual share market follower and notice a particular company’s share price has jumped up in price suddenly and you are thinking, “What have I missed out on,” then it all may not be as it seems.

Let me explain.

Years ago around 2001 I think, I owned some shares in Air New Zealand. The company almost went broke. The company almost went bust. It was the government who bailed them out. The share price went from about $1.95 per share down to 14 cents per share. The share price increased a little but still only a fraction of what I bought them for.

What the company then did was increase the share price but you owned fewer shares.

This is how it works:

For the sake of simple mathematics, let’s assume company xyz’s share price is 20 cents per share.  xyz then decides to increase the price of the share to $1. 

If an investor owned 1000 shares at 20 cents, they will now own 200 shares worth $1 each.

Unless you are a follower of the share market you may be unaware of this actually happening. 

I don’t know how often this situation occurs but it may pay to do your homework if a particular share increases dramatically for no apparent reason.

What I have just tried to explain is known as reverse stock split or share consolidation.

This makes the company more attractive to investors. They may hold fewer shares but the real value of the total shares in that particular company is the same. It is just that now they hold proportionately fewer shares.

Share consolidation can be viewed negatively by investors as a company in trouble and this could impact the share price.

One reason why a company may choose share consolidation is that if it’s shares fall below $0.50 for 30 consecutive days then it will be de-listed. This is applicable to the New York Stock Exchange and there may be different rules for other countries. 

Another benefit of share consolidation is that it will mean fewer share certificates will need to be printed which will reduce costs.

It is always a good idea to check the history of a company’s share price before you invest in it. If it has been the subject of a share consolidation it may show up or at least give some indication that it has. Only a small percentage of companies will have been the subject of share consolidation, therefore, you are unlikely to come across this situation.

ABOUT THIS ARTICLE

You may use this article as content for your ebook or website/blog. The information may not be applicable to your personal circumstances therefore discretion is advised.

 

www.robertastewart.com

#share consolidation

#shares

#mutualfunds

#share market

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

Disclaimer: I may receive a small commission if you join sharesies.

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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