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The Advantages of Saving Money

The Advantages of Saving Money

Written by R. A. Stewart

“It is not how much you receive but rather what you do with it after you receive it.”

The benefits of saving a portion of whatever you receive cannot be understated. We all have a choice in what we do with our money and unless you are being controlled by someone else then your choice of what happens to your money is the major influencer of your long term financial wealth.

It is the choices you make in life which will have a major influence on your financial outcome. That is the choice of entering into a relationship, the choice to purchase a car, and so forth. In many instances there are people who bleat about the cost of living crisis but at the end of the day their situation is often their own making.

It is all about priorities. 

It can be said that stupidity is one reason for poor financial outcomes. I mean how else do you explain why there are people who are subscribed to Netflix and satellite TV, but have not joined Kiwisaver, New Zealand’s retirement scheme.

Saving for something and not just for the sake of it will give your life some purpose.

If you are wondering what to save for, here are several ideas:

  1. Your retirement
  2. An emergency fund
  3. An education fund
  4. Travel
  5. Major Purchases
  6. Your Hobbies
  7. Your Wedding
  8. Home repairs
  9. Start a business

There is a stark difference between saving to build up your wealth and saving to spend. When you are saving to build up your asset base you are increasing your resilience to life’s financial shocks. Saving to spend means that you are back to square one once your money is gone. This is particularly so when it comes to travel. 

Other expenses such as further education can be a good investment but you have to be sure that it is what you really want to do otherwise it will be just a waste of time and money.

Setting up an emergency fund is an excellent way of having money available for unexpected expenses which may crop up from time to time. 

Home repairs may add value to your home but it all depends on your priorities. Retired people may prefer to spend that money on travel.

Here is something to think about:

Having your assets in the share market means that your assets can be quickly turned back into cash when you need it. This is not the case with property which may take months to sell.

Another thing to consider with property is that many of the home improvements may not even increase the valuation of the property which means that it is money which is spent with no return.

Saving and investing money is a good habit to get into, it leads to a more prosperous future. Borrowing money and getting into debt is a bad habit which can lead to a poor financial outcome. Even if you do manage to pay everything by the due date, you have to consider whether you are making the right choices in your choice of lifestyle.

Paying interest on borrowed money over a lifetime is an expensive way to purchase stuff. It is better to save up for things rather than borrow, that way you will pay the retail price of whatever it is you are purchasing.

The bottom line is that living within your means is the key to managing your money successfully and that requires discipline.

Read my other articles on www.robertastewart.com

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The Benefits of getting into the habit of Investment

 

Written by R. A. Stewart

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

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

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

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

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

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

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

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

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

“Inflation is the enemy of the conservative investor.”

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

These people blamed others for their loss. 

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

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

About this article

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

Read my other articles on www.robertastewart.com

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How to Start a Sharemarket portfolio from Scratch…

How to Start a Share market portfolio from Scratch…

Even if you have never invested a dollar

Written by R. A. Stewart

You are a beginner to investing and want to know how to get involved in the share market and don’t have much money to invest.

My advice is firstly to ensure you have set up a pension scheme with your employer. This will help make money retirement easier as far as finances goes. Anything else you invest should be treated as strings to your financial bow.

Here is my advice to investing novices. 

There are two ways for you to drip-feed your money into the share market. They are:

  1. To join a managed fund type of investment. This is a fund where your money is combined with the money of other investors. The fund manager invests in the share market on your behalf. This minimizes risk because funds invested in this way are spread across different asset classes, something which is unobtainable for most investors unless you are already financially well off.
  2. To sign up with an online investing site where you are able to drip-feed money into the share market. Do your research into the various platforms. Popular ones are robinhood in the USA and sharesies in Australasia. 

Two pieces of advice which financial experts will tell you is “Do your research and diversify.”

It helps if you are familiar with the industries and companies you are investing with. I use the online platform “Sharesies” which is based in New Zealand. My strategy is to choose one company per year and drip-feed money throughout the year into this one company. I chose New Zealand based companies, all of them household names. I have already decided the following year’s company to invest in by Christmas.

I have invested in a range of companies such as Genesis Energy, Spark, Fontierra, Fletcher Building, PGG Wrightsons, and Contact Energy. All are well known brands.

It is important not to get too greedy. The internet is full of stories of people who got rich investing in this or that and made a killing. This has to be treated like a grain of salt because for everyone like that, there are countless others who tried the same thing and failed.

Greed often gets the better of people and the one who made the killing will often end up giving it all back.

The share market rewards consistency and persistence. Make sure you are in the right fund for your risk profile and your goals. If you are drip-feeding money into the share market like I am doing then it shouldn’t matter how the markets are performing. Just keep investing and let time be your friend. After all, investing with an online app is just another string to my financial bow.

You should invest in the share market with money that you cannot afford to lose is a piece of advice I have heard time and again. The main question before you invest in something is, “How will the loss of this money affect my lifestyle?” 

I would not recommend that you invest in growth funds if you need the money within a year or two because the markets may drop just as you are about to withdraw the money.

It is important to be sensible and strategic with your investing and just as important to keep a cool head otherwise you may end up with burnt fingers.

About this article

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

Read my other articles on www.robertastewart.com

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Don’t follow the crowd

 

Written by R. A. Stewart

Prior to the 1987 sharemarket crash, which was named “Black Monday,” investors were rushing to buy shares and as the price rose and the value of their portfolio increased, people borrowed money to purchase shares using the value of their holdings as capital. When Black Monday arrived, the value of their portfolio dived, the result being that investors who borrowed money found themselves in the position of owing more money than their shares are worth.

The problem with using borrowed money is that the crunch comes when you have to pay it all back plus interest.

Jumping on a bandwagon can be very costly. In the case of the 1987 sharemarket crash, the price of shares did not reflect their true value but rather the amount of money which went into the market.

It reminds me of the old saying, “Something is only worth what others are prepared to pay for it.”

We have seen similar examples of companies on the share market which have seen their price rise then come crashing down quickly. Many who jumped on the bandwagon got their fingers burnt.

If you are going to try your luck at making a killing, then this needs to be done with your discretionary spending money and not with your retirement funds or your deposit for a house fund.

The reason being that investing for a killing is a short term speculative investment.

Once in a while you will hear stories of someone who made a killing by investing in such and such but you never hear about those who tried the same thing and lost. It is likely that such people ended up losing their profits.

Here is another saying worth keeping in mind, “Whenever there is an opportunity for a capital gain there is an opportunity for a capital loss,” that is the nature of the markets.

But with the right investing strategy you can achieve your goals whatever the markets are doing. If you have invested according to your risk profile then the state of Wall Street should not be a concern to you.

A windfall is only as good as how it is being used. It is not much good if it is being frittered away. Use it to your best advantage according to YOUR OWN GOALS and not what others think you should do with your life.

Following the crowd can destroy one’s chances of financial prosperity; Just take a look at how much money smokers are paying for their addiction. And where did it all start?

As a teenager when someone was offered a cigarette by their peers and because they were people-pleasers they accepted.

It is rather mind-boggling the amount of money smokers are burning through per annum. That money could have been put to better use. Not to mention the health aspect of smoking.

Set goals that align with your values and not ones which others have tried to impose on you. If someone has limitations then they will impose their limitations on you. Take heed of wise advice but use your common sense to discern whether the advice is good or bad. If you are unsure then ask a number of adults for their opinion. Don’t be afraid to ask and never be so puffed up with pride that you never take advice from anyone. “Pride always comes before a fall.”

About this article

The content of this article is the writer’;s own opinion 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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Share market falls on the back of Trump Tariffs

Markets tumble

Written by R. A. Stewart

The markets have taken a tumble after President Trump’s tariffs have started a trade war.

The newspapers have reported that Kiwisaver balance will be affected on this. This is stating the obvious. Kiwisaver balances may have dropped, but a lot of people are decades away from retirement so how the markets are performing in 2025 is not going to affect how much they have in kiwisaver when they retire in 2035 and beyond.

It all boils down to selecting the right fund for your risk profile. Money invested falls into one of three categories. Short-term money, medium term money, or long-term money depending on when you are going to be needing that money.

Other factors which come into it are your age, health, and commitments.

The share market goes up and down and the recent (March 2025) tumble is mainly due to the tariffs which President Trump has imposed on goods from certain countries, namely steel. 

Losses are only on paper, but investors who react to recent events and change to conservative funds will lock in those losses and miss out on the gains when the markets rebound. 

The United States will have a new President in four years time, and it certainly will not be Donald Trump in charge then so the markets will certainly bounce back then, if it had not prior to that.

Changing to conservative funds is not the only way to lose during a market slump. The others are to stop contributing to your retirement fund or if you are already retired, make withdrawals from kiwisaver.

With everything being said, it is not the current market slump which will determine how much your retirement portfolio is worth when you retire but how you react to market volatility and that is all down to the choices you make. 

Here is a list of choices which will affect your kiwisaver balance when you retire:

  1. Changing from a growth or balanced fund to a conservative fund.
  2. Stop contributing to your retirement fund.
  3. Withdraw money from your kiwisaver.
  4. Chopping and changing from one type of fund to another.

No one is going to reach the retirement age and regret that they made contributions to their retirement fund. Ask yourself this question, “Will my future self thank me for investing my money instead of wasting it?”

Your retirement fund can only be accessed when you reach the retirement age, therefore you need an alternative source of funds to cover any future financial needs. There are lots of online investing platforms available where you can invest a minimal sum of money regularly and still have easy access to your funds. If you are from New Zealand or Australia, sharesies is a good option for you. This gives you easy access to the share market.  Check out Sharesies Here

About this article

The opinions expressed in this article are of the writer’s own opinion and may not be applicable to your personal circumstances, therefore discretion is advised. 

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

You may use this article in full or part as content for your blog or ebook. Check out my other articles on www.robertastewart.com

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The P/E Ratio Explained and Why it matters

Written by R. A. Stewart

The P/E Ratio is a useful tool for calculating a particular share’s performance. P/E stands for Price to Earnings Performance. This tool is a useful guide because it tells us whether a particular share is overvalued or undervalued.

The P/E Ratio is found by dividing the current share price of the company by the dividend per share.

If the company’s share price was $5 and the dividend per share was $1 then the P/E ratio would be 20. 

A company might base its P/E ratio on what it has earned in the past (trailing P/E) or what they expect its earnings to be in the future (forward P/E Ratio).

A higher PE ratio indicates that investors are willing to pay a higher share price today compared to its current earnings.

A lower P/E ratio might be a sign that investors are less willing to pay a higher price for the share compared to its current earnings.

It is important not to get sucked in by a value trap-some companies offer what appear bargains but it is really a sign of financial instability.

A negative P/E ratio means that the company has made a loss. This could be due to expansion-that is when the company sacrifices profits to invest in the company.

However, when a company consistently has a negative P/E ratio it runs the risk of bankruptcy.

Making your investment choices

Which is better, Higher or lower?

Some investors prefer investing in a company with a higher P/E ratio due to its potential for growth while others go for companies with a lower P/E ratio on the grounds that the market has undervalued these companies. A combination of both is often used by investors.

Financial experts say, “You should only compare apples with apples when comparing different companies, P/E ratio.” In other words, only compare it with stocks in similar industries. That being said, if a stock has a higher P/E ratio than its competitors it could indicate that the market believes that it has higher growth prospects than its competitors.

A factor which needs to be considered by investors is that past performance is no guarantee of future performance. There are other factors to consider. A company may have a good year but that may be due to a one off event such as a selling off of assets. The same applies in reverse, a company may have shown a one off loss due to investment into the business.

To Summarise

The P/E ratio is the proportion of a company’s share price in relation to its earnings per share. To work out the earnings per share Divide the stock price by the earnings per share.

About this article

The views expressed in this article are of the writer’s own experience and knowledge and may not be applicable to your personal circumstances, therefore discretion is advised. You may use this article as content for your blog/website or ebook.

Check out my other articles on www.robertastewart.com

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3 Habits which can make you rich

3 Habits which can make you rich

Written by R. A. Stewart

“You don’t have to be rich to invest but you have to invest to be rich.”-Unknown

Forget the lottery, here are three habits that can make you rich beyond your wildest dreams. It does not matter how old you are, how much money you currently have in the bank, or whether you have any experience at investing. If you can look beyond your own personal circumstances and develop these three habits then you are well on your way to financial success. 

So you may be wondering what is the magic formula for financial success?”

Number one habit to develop is:

The Habit of Saving.

Simple, isn’t it. You simply spend less than you make and whatever is leftover is your excess.

All of us have an ordinary savings account where our payment from whatever source goes into. This really should be named a spending account because we spend money from this account using our bank card. It is a good idea to transfer money into another account which is used for saving up for whatever it is we are saving for and this account should not be linked to internet banking where scammers are able to access it.

Saving money gives you financial security and enables you to cover the unforeseen emergencies which crop up from time to time. Medical and dental emergencies, car and household appliance repairs can be expensive so having savings behind you cushions you against these kinds of shocks.

Saving also enables you to reach your financial goals and helps you to become wealthy.

The Habit of Investing

Most people are able to save something from their pay packet but comparatively few people invest that money. For those people their savings becomes spending money. In the end these people have nothing to show for their years of toil and their options are limited due to their lack of finances. 

Investors on the other hand have more options available to them later in life because finances are not a problem. 

The habit of investing also increases your financial literacy which in turn helps you to make better choices when deciding on where to invest your money. 

This reduces financial stress, increases your independence, and prepares you for retirement.

The Habit of Reading

Reading books increases your knowledge. The habit of reading books of a financial nature will increase your financial literacy. It is a fact that most people are not financially literate. They may know how to negotiate loans and how to get a credit card but people who are intelligent do not purchase stuff on credit because they know that it only means paying more for whatever they are buying.

You do not have to spend too much money buying books when your local library has good books available. You might also pick up some good books at your local charity store.

On the internet you can find lots of useful information on personal finance. Ask chatgpt to provide some answers to any questions you have or go to quora.com which is a question and answer site. You need a gmail address to register with quora.

About the article

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

Read my other articles on www.robertastewart.com

Investing with Sharesies is an accessible and straightforward way to invest in the stock market. By following these steps, 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

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Book Review: Rich Dad Poor Dad 

 

Written by R. A. Stewart

Rich Dad Poor Dad by Robert Kiyosaki is one of the best selling finance books of all time. It tells the story of two Dads in his life, his biological father who he called “Poor Dad” and his friend’s father, who he called “Rich Dad.” 

His Poor Dad worked diligently all of his life but could not get ahead, his Rich Dad was smarter with his money and was rich. The Rich Dad mentored Robert and helped him become financially literate.

It is not how much money you make but rather what you do with it after you make it and that is the basic theme in this book.

 

In the book, Robert focuses on getting rich through financial literacy, investing, and entrepreneurship.

The most important lesson is to know the difference between assets and liabilities. Kiyosaki reminds readers several times throughout the book the importance of building up your assets and minimizing your liabilities in order to build up your financial portfolio. He makes the point that many people mistakenly think they are acquiring assets when in fact they are accumulating liabilities. A perfect example is of a house which though it may be a family’s biggest purchase during their lifetime is a liability because it costs money to keep and maintain.

Kiyosaki also stresses the importance of a financial education and claims that the education system does not teach financial literacy to the detriment of children.

The book also explains the concept of having money work for you instead of working for money. Poor Dad had the working man’s mindset of working a set number of hours per week for money while the Rich Dad focuses on acquiring and building assets which generate an income.

Writing Style

Robert Kiyosaki writes in a way as though he is a mentor to his readers rather than if he was simply writing a textbook which resonates with so many readers.

The book has had its critics though, one is that it is too simplistic with not enough actionable advice on how to create and build wealth. It has also been criticized for focusing on financial gain and little emphasis on the social or environmental impacts of wealth building. 

Kiyosaki’s dismissal of education does not resonate with everyone who values the education system. He does highlight the shortcomings of the education system, but his message is not going to go down well with parents who are trying to encourage their children to focus on their school work.

Conclusion

Rich Dad Poor Dad is certainly a very good book as far as improving your financial literacy is concerned, but the information needs to be applied according to your personal circumstances. I have no hesitation in recommending Rich Dad Poor Dad as a must read for anyone wishing to get ahead in life.

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Check out my other articles on www.robertastewart.com

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The Art of Diversification

The Meaning of Diversification

Written by R. A. Stewart

Diversification is a word that you will hear in investment circles, particularly when investing in the share market, but what exactly does it mean?

To put it in plain language, Diversification is when you divide all of your money between different asset classes and companies. Your total portfolio may be x amount of dollars; an astute investor will invest a certain amount in power companies, a certain amount in banks, a certain amount in insurance companies, and so on.

We often hear of horror stories whenever a company folds and the one that crops up is that investors lost their entire savings in the one company. Big mistake!

That is leaving all of your eggs in the one basket because you do not know what kind of misfortune will hit any particular company.

Government regulations and the economic cycle are out of the control of the company. 

Then there are trends which will have some influence over the bottom line.

There is no guarantee that whatever occurred in the past will repeat itself in the future.

Investment platforms such as Sharesies, Hatch, and Kernel Wealth in New Zealand and Robin Hood in the US enable the ordinary man and woman in the street to invest with a minimum amount of money. This provides an excellent education tool for people who are willing to increase their financial literacy by taking part in the share market.

There is another method of diversification and that is by investing in managed funds or as they are described in the US, Mutual Funds. This is where your money is combined with that of other investors. It is a case of safety in numbers.

Managed Funds provide investors with three options, Growth Funds, Balanced Funds, and Conservative Funds.

Growth Funds are higher risk, higher growth stocks aimed at long term investors. That is investors who are investing for 10 years or more. The reason why they are more suitable for long term investors is because they have more time to recover from a market meltdown, which is more liable to happen with growth funds. The young ones are more suited to Growth Funds because they have more time to recover from a share market crash.

Conservative Funds are safer with investors unlikely to see the kind of falls occurring in the growth funds but the flip side is that an investment in conservative funds will not grow as fast.

Financial advisors in New Zealand have often stated that young people should invest their retirement savings in growth funds to maximise returns. 

Balanced Funds are a combination of Growth and Conservative Funds. They basically give you the best of both worlds.

Diversification does not mean that you should choose an online investment platform such as Sharesies or Robinhood and invest your whole life savings there. The reason is because there have been instances in the US when these types of online platforms have folded.

Some readers may say, “I know/read about an investor who put all of their money in one company and made a killing.”

My answer to that is, “Greed gets the better of people such as this in the end,”

What is likely to happen is that they will try the same thing again and again and give all of their previous gains back plus a whole lot more.

When you hear stories of so and so making a killing, what you do not hear about are those who tried the same thing and lost all of their money.

Be sensible with your money and you will reap a harvest in the end.

About this article

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

Read my other articles on www.robertastewart.com

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People you should not take Money advice from

Written by R A Stewart

Have you heard of the donkey story where an old man and his grandson were walking the donkey along the street?

If not here is the story:

An old man and his grandson were leading a donkey as they were walking along the road. A bystander said to them, “Why don’t you both get on the donkey and ride it?”

So they both rode the donkey but further down the road the second bystander said, “Hey look at that poor donkey having to carry two people; that is cruelty.”

So the boy got off the donkey and led it along the road while the old man rode it but further down the road, a third bystander said, “look at that poor boy having to walk while that old man is riding the donkey.”

So the old man got off the donkey and his grandson got on, however further down the road, a fourth bystander said, “Look at that poor old man, walking along the road while the lad is riding the donkey.”

So the boy got off the donkey and they both continued their journey as they both led the donkey on foot.

What is the moral of this story?

The short answer is that people can take away your power to think for yourself if you allow them to.

If you have a bit of money to spare there will always be people who think they know what you should do with it and a lot of these people have little or no savings of their own.

Here is an example:

I know someone who years ago made a fortune on sports betting. He turned a few hundred dollars into over thirty grand. In the early stages when he had about six grand his colleagues at work were giving him advice and one was to use the six grand for a deposit on a car. I told him that not only would he be back to square one but he would also have a debt to pay. 

He was sensible enough to ignore stupid advice like that. I did however, tell him that he should at least invest enough into his Kiwisaver account to get the government incentives.

Financial illiteracy is common which means it is vitally important to read books on personal finance and pick the brains of the authors rather than allowing random individuals to infect your mindset.

A bad attitude towards money can be a hindrance of wealth. I once said to a lady that her daughter should attend financial seminars when she is older in order to meet successful men. (She was 9 or 10 at the time). She said, “Men like that are selfish and stingy.”

I suppose if you are a gold digger you would think like that. I mean “who needs financial advice when you can just get a man”

It is worth remembering that some of the best financial writers are women, such as Frances Cook and Mary Holm. They strongly encourage women to take responsibility for their finances rather than just have a man as their financial plan.

The young people may not be your best source of financial advice either because they do not have the experience of investing like the older generation. 

One of the things which the financially illiterate say to reinforce their opinions is “You can’t take it all with you.”

That may be true, however, during one’s lifetime, there are life changing events which require savings. Here is a list:

Flatting 

Buying a car

Going on your Big OE

Further education

Saving for a house

Marriage

Children

Retirement 

Responsible people will get into the habit of saving from a very young age in order to be able to finance whatever crops up during their lifetime when they have the ability to do so. Stupid people will fritter away their discretionary spending money so that when a rainy day comes they have money squirrelled away for something to fall back on.

About this article

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

www.robertastewart.com

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Your friends can be hindering your financial dreams