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How to Invest According to Your Risk Profile 

Written by R. A. Stewart

Your risk profile is a term you may hear from time to time from financial commentators. This is the amount of risk you are able to take when investing your money. There are several factors which determine what your risk profile is and the same profile is not applicable to everyone who invests because everyone’s personal circumstances are different.

It should also be pointed out that your financial portfolio could have a different risk-factor attached to them.

Here are the main factors which determine your risk-factor

  1. Your Personal Circumstances

If you have young kids then there is little room for risk in your portfolio apart from your retirement funds. Someone who is young and single can take more risks without being reckless. 

  1. Your Health 

This has a bearing on your plans if your health is so compromised that there are medical bills to think about. If this is the case then you might want to be a little conservative with your investing because the last thing you need is when it comes to cashing in on your investment only to find that you have less money than you thought due to a market meltdown.

  1. Your Age

At a young age you have more room for financial mistakes. This is because time is your friend. You have more time to recover from financial setbacks. This all means that investing in growth funds is a good option for you as far as your retirement fund is concerned. If you are saving for a vehicle and you have given yourself a 1-2 year timeline for this then investing a little more conservatively is the way to go. The last thing you want to happen is for the markets to drop just when you need the money for your car and for your savings to be less than you expected.

  1. Your Goals

Your goals or rather what you expect to do with your savings whether it be for a car, house deposit, overseas trip, or to build up your financial portfolio is a factor in determining which is the best option for investing your money. If you are investing to increase your wealth and have no set time as to when you need the money then you have more room for risk. If you are saving for something in particular then you have less room for risk.

  1. Your Debt levels

“A debtor is a slave to the lender” and if you have debt your first responsibility is to pay it off before you even consider saving for anything. Keep in mind that if you have debt then you have no discretionary spending money until that debt is paid.

  1. Your Timeline

The question should always be asked, “How will this affect my lifestyle if there is a market meltdown?”

This means that you should invest according to when you need the money. Here is a quick guide:

Timeline Time

Short-term: 12 months or less Savings account/conservative fund

Medium-term:1-5 years Conservative/Medium funds

Long-term 5 years+ Growth funds

About this article

This article is of the opinion of the writer and is not financial advice. 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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The true cost of keeping pets

Written by R. A. Stewart

Most people have a pet of one kind or another but do you know what this is costing you?

I think you might be shocked if you add up the true cost and how it is affected your lifestyle in the present and in the future.

Using a dog as an example, I read that the cost has been estimated at between $1,400 and $4,000 per year but this seems rather conservative and there are some things which have not been included in the calculations.

Initial costs

Purchasing or adopting a dog can cost $125 up to over $1,000 and more depending on whether you obtain a dog from an SPCA or breeder.

Vet work

$150-$1,500 for neutering or spaying and micro chipping.

Odds and ends

$150 upwards for crates, bowls, collars, leads, and litter boxes.

Ongoing Expenses

$400-$1,500 per year depending on the dietary requirements and breed of the dog.

Ongoing Healthcare

$200-$600 per year at the vet for boosters, worm, and flea treatment.

Council Registration

$80-$300 per annum depending on council regulations.

Pet Insurance

$200-$1,200 per year depending on the level of coverage and the age of the pet.

Total cost of keeping a dog during its lifetime

The total cost of keeping a dog during its 14 year lifetime has been quoted at $20,000- $35,000. This can be more if there are major medical issues.

What has not been included is the time spent in looking after a dog. To calculate the cost of this, multiply the time spent by the minimum hourly rate of pay and you will discover just how expensive keeping a dog is.

Reminds me of what Warren Buffet was quoted as saying, “Don’t put your money in anything which needs painting or feeding.”

How Keeping a Dog is affecting your Present and Future Lifestyle

Money which is being used to support pets is money which is not being used to build wealth. It is consumer spending with nothing to show for it after it is going. This money is discretionary spending money because it is an expense which the household can do without. It can also be classed as a liability because it costs money.

The total expenses of keeping a dog adds up to an eye-watering amount during its lifetime. That money is better directed to paying off a mortgage, a retirement fund, education, or rainy day account.

Imagine not having any money for car repairs, a dental or medical emergency, or new shoes because it’s been spent keeping a pet? That is the situation which many people end up in because they prioritised spending on their pets.

The SPCA have had pets dumped on them because their owners could not afford to keep them during a cost of living crisis. Pets are a liability and money spent on them is discretionary spending money. Owning a pet is a choice, not a fixed expense which you have no control over. It’s a choice which you must make with due care and consideration as to what the financial implications are.

About this article

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 Turn Discretionary Income into Long-Term Wealth

Discretionary Income 

Written by R. A. Stewart

If you have taken a good look at your bank statements you will notice payments such as rates,  power, and groceries. These are fixed expenses and are necessary. Then there will be payments for such things as entertainment, hobbies, and the like. These are things which you can do without.

Discretionary spending money is what you have available to spend beyond your necessary expenses. Expenses that you need to pay every month. If these are not paid there will be consequences such as a financial penalty. In the case of rates this is usually an extra 10% if the account is not paid by the due date.

Discretionary spending is what you have control over. Food is a necessary expense but going out for a meal in a restaurant is classed as discretionary spending.

If your income drops your discretionary spending is affected. You have less money to spend on whatever it is you love to spend your money on.

Do you have more discretionary spending money if your income rises? That all depends if your costs go up. During the current cost of living crisis as the economy is often called, an increase of income does not always keep pace with rising costs which means there is less discretionary spending money available. 

It is the costs of fuel, power, insurance, and rates which ordinary people cannot control which are biting. Food and groceries are necessities but at least people have some measure of control on what to spend their money on in the supermarket.

Investing your Discretionary spending money

It is not always the amount you receive in your pay packet but what you do with it after you receive it which determines your financial outcome. What separates a good money manager from a bad one is that a good money manager will save and invest some of their discretionary spending money with their future in mind while a bad money money will spend everything without any thought for the future.

It takes vision to make provision for the future. Making plans for the future is a responsible and mature thing to do. There are consequences for spending everything. One is that when an unexpected bill arrives there is no money in the kitty to pay for it.

If you do not have an emergency fund then using part of your discretionary spending money to start one is a good idea. 

There are plenty of investing apps about. These can be used as a way to invest on a shoe string. Getting involved in the share market helps to build your financial literacy.

If you have more discretionary spending money available and want to be a bit more adventurous then investing in crypto-currency may be your cup of tea if you are aware of the risks and don’t mind taking risks. After all, if you spent your discretionary money on a restaurant meal it will be gone in one night. You might lose it on Bitcoin so what is the difference?

When investing your money ask the question, “How will this affect my lifestyle if I lost this money?”

If you were saving for a new car and invested the money you set aside for a new car in the crypto-currency and lost it all, the result will be that you will be unable to purchase your new car. The same thing applies to whatever you are saving for, an overseas trip, education, or  house deposit. Investing requires common sense and diligence.

About this article

This article is of the experience of the writer and is not financial advice. It 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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Photo: Lake Mapouriki near Franz Josef Glacier, West Coast, New Zealand

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Investment Strategy

Investment Strategy

Written by R. A. Stewart

Because investing is not a sure thing in most cases, it is much like a game – you don’t know the outcome until the game has been played and a winner has been declared. Anytime you play almost any type of game, you have a strategy. Investing isn’t any different – you need an investment strategy which is based on factors such as your age, your goals, and your personal circumstances.

An investment strategy is basically a plan for investing your money in various types of investments that will help you meet your financial goals in a specific amount of time. Each type of investment contains individual investments that you must choose from. A clothing store sells clothes – but those clothes consist of shirts, pants, dresses, skirts, undergarments, etc. The stock market is a type of investment, but it contains different types of stocks, which all contain different companies that you can invest in. 

Your financial plan must be one which fits in with your personal circumstances and not something which you feel you should do just because others are doing it. Making choices which will enable you to live within your means is at the heart of money management, it is not the size of your pay packet which counts it is what you do with it which determines how much you have by the following pay day.

If you haven’t done your research, it can quickly become very confusing – simply because there are so many different types of investments and individual investments to choose from. This is where your strategy, combined with your risk tolerance and investment style all come into play. There are plenty of books available on finance and investing. Reading these books will increase your financial literacy with the result that you make better choices in the future.

If you are new to investments, work closely with a financial planner before making any investments. They will help you develop an investment strategy that will not only fall within the bounds of your risk tolerance and your investment style, but will also help you achieve your financial goals. 

Never invest money without having a goal and a strategy for reaching that goal! This is essential. Nobody hands their money over to anyone without knowing what that money is being used for and when they will get it back! If you don’t have a goal, a plan, or a strategy, that is essentially what you are doing! Always start with a goal and a strategy for reaching that goal!

Your goals are the factors which determine where you should invest your money. If the money is for your retirement then growth funds may be the answer to where to invest but this all depends on how long to go before you retire and when you are likely to need that money.

Never beat yourself up for making the odd mistake and never let it deter you from making future investments. Learn from your mistakes and learn from them. In this way you will become a better investor.

ABOUT THIS ARTICLE

This article is for information purposes only and is not financial advice, it is of the opinion of the writer and may not be applicable to your personal circumstances, therefore discretion is advised. 

Read my other articles on www.robertastewart.com

Working in your chosen field

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

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

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

How to Enjoy Your Job

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Investing: Experience is the best teacher

Investing: Experience is the best teacher

Written by R. A. Stewart

“He who never made a mistake never made anything”-Jim Addison, Scottish evangelist

In investing as in anything else in life there is no substitute for experience. It is all very well learning about how to become a good investor but it is only when you start investing your own money in the markets when you learn how to become a good investor.

Some investors play the markets on paper and are excited that their paper portfolio is showing a profit on paper so start investing real money and soon find that the markets don’t just rise but fall as well.

It soon dawns on them that what goes up also goes down. 

It is important to get used to the volatility in the markets and ride out the lows. If you are clear on why you are investing then the highs and lows are not a problem.

There are two ways to learn:

  1. Your own mistakes
  2. The mistakes of others

You can reduce your own mistakes by getting yourself financially literate. This comes from reading books on investing and finance and from learning from the mistakes of others.

There is nothing quite like making your own decisions as to where you are going to invest your money. The satisfaction to be had when your judgment is spot on, but you will make mistakes along the way as we all do.

Don’t beat yourself up if some company you had shares in fell by the wayside. Learn from your mistakes and move on. It is important to not let the market volatility deter you from investing.

If you are new to the world of investing then think of it this way. If you are learning to drive a motor vehicle, learning how to use a computer, or learning the ropes in a new job, you will make mistakes but as you gain more experience your level of competence will grow and your mistakes will be less and less.

Learn all you can about the ins and outs of the market and apply it to your own personal circumstances. The older investors have been through a number of roller coaster rides with the share market over the years and are worth listening to for their opinion, but it pays to have the discernment to know who is worth listening to and who not to take advice from.

A few people were scared from the 1987 share market crash, called “Black Monday” that they never invested in the share market since. Such people have missed out on the gains since 1987 and the experience would have made them good investors.

Good judgement comes from past bad experiences; it is all a result of the lessons taken from previous experiences. 

Investing experience will give you the ability to make better choices in the future and this helps to increase your future wealth. 

Never use the excuse, “I don’t have any experience in this or that”, we all started from somewhere, and today it is possible to start investing in the markets on a shoe-string with all of these investing apps.

All the best

About this article

The information here is the opinion and experience of the writer and is not financial advice, therefore discretion is advised.

Read my other articles on www.robertastewart.com

 Tired of seeing your bank charge you $5-10 every time you withdraw cash abroad PLUS that hidden foreign transaction fee? 🤯 That’s money that should be buying you a gelato, a beer, or a souvenir. Wise gets you the real mid-market exchange rate with only tiny, transparent conversion fees from 0.42%. Stop funding your bank’s next vacation. Fund yours. 

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