How Estate Planning Will Benefit You and Your Family: Why You Should Start Thinking About Your Death!

A will is a legal document that specifies how you want your assets and affairs to be handled after your death. It can also name guardians for your minor children, appoint executors to carry out your wishes, and provide instructions for your funeral and burial. A will is one of the most important documents you can have, as it gives you control over your legacy and protects your loved ones from unnecessary stress and conflict.

However, a will is not enough to ensure a smooth and efficient transfer of your estate. You also need to plan ahead for other aspects of your estate, such as taxes, debts, beneficiaries, trusts, and superannuation. This is where estate planning comes in. Estate planning is the process of creating a comprehensive and coherent plan for your estate that minimises costs, delays, and disputes, and maximizes the benefits for your heirs.

Estate planning can help you and your family in many ways, such as:

• Reducing or avoiding estate taxes and fees, which can eat up a significant portion of your estate and leave less for your beneficiaries.

• Providing for your spouse, children, grandchildren, and other dependents, ensuring that they receive adequate support and protection according to your wishes.

• Preserving your assets and preventing them from being wasted, mismanaged, or squandered by irresponsible or inexperienced heirs.

• Creating trusts for specific purposes, such as education, charity, or special needs, allowing you to direct how and when your assets are distributed and used.

• Planning for incapacity, which can happen at any time due to illness, injury, or old age. By appointing a power of attorney and an enduring guardian, you can authorize someone you trust to make decisions on your behalf regarding your finances, health, and personal care.

• Expressing your values and preferences, such as your religious beliefs, ethical principles, and charitable causes, and ensuring that they are respected and honored by your executors and beneficiaries.

Estate planning is not a one-time event, but an ongoing process that requires regular review and update. Your circumstances and goals may change over time, as well as the laws and regulations that affect your estate. Therefore, you should consult an estate planning lawyer and a financial planner to help you create and maintain a suitable and effective plan for your estate.

To illustrate the importance of having a will and an estate plan, let me share with you a tragic story that happened to a friend’s neighbour recently. His name was John (changed all names for privacy reasons), and he was a successful businessman who owned several properties and businesses. He had a wife, Mary, and two children, Tom and Lisa. John did not have a will or an estate plan, thinking that he was too young and healthy to worry about such things.

One day, John was driving to work when he was involved in a fatal car accident. He died instantly, leaving behind his grieving family and a complicated estate. Without a will, John’s estate had to go through probate, which took months and cost thousands of dollars in fees and taxes. Mary had to deal with the legal and financial hassles, as well as the emotional trauma of losing her husband.

To make matters worse, John’s estate was divided according to the intestacy laws, which did not reflect his wishes or his family’s needs. Mary received half of John’s estate, while Tom and Lisa received the other half. However, since Tom and Lisa were minors, their share was held in trust until they turned 18. Mary had no access or control over their share, and had to apply to the court for permission to use any of it for their education or living expenses.

Furthermore, John’s businesses and properties were left without proper management or succession planning, resulting in losses and disputes. Some of John’s business partners and creditors tried to claim a portion of his estate, while some of his relatives and friends contested his estate, arguing that they deserved a share. Mary had to fight off these challenges, which added more stress and costs to the already difficult situation.

John’s death and the aftermath could have been avoided or mitigated if he had a will and an estate plan. He could have ensured that his estate was distributed according to his wishes, that his family was well taken care of, and that his legacy was preserved and protected. He could have saved his family from a lot of pain and trouble, and given them peace of mind and security in their greatest time of need.

Don’t make the same mistake as John. Make a will and an estate plan today, and enjoy the benefits of knowing that you and your family are prepared for the future. Contact us today to find out how we can help you with your estate planning needs.

If you need further help with the starting process, contact your local estate lawyer and ask around for prices. Creating a will, will be very different based on your circumstances, hence having your financial adviser in your corner would be wise so to make sure you are reducing costs where possible.

Until Next Time,

Take Back Control

Risk versus Reward: How to Balance Your Portfolio for Long-Term Success

Investing is all about the future, but having a solid understanding of the history of markets can provide clarity and confidence when dealing with uncertainty. One of the most important concepts in investing is the relationship between risk and reward, which measures how much return you can expect for taking on a certain level of risk.

In general, the higher the risk, the higher the potential reward, but also the higher the chance of losing money. Conversely, the lower the risk, the lower the potential reward, but also the lower the chance of losing money. However, risk and reward are not always proportional, and different asset classes can have different risk-reward profiles over time.

Historical Returns by Asset Class

One way to compare the risk and reward of different asset classes is to look at their historical returns over a long period of time. For example, the following table shows the annualized returns and standard deviations of several asset classes from 1985 to 2019. You can check out the Vanguard Asset Class tool to check out data from 1970 through to 2022 here.

Historical Returns by Asset Class - 35 years (1985-2019)

Data for the graph above on 34 years of returns and volatility for each asset class.

As you can see, stocks have historically delivered the highest returns, but also the highest volatility, among the asset classes. Bonds have offered lower returns, but also lower volatility, than stocks. Cash has provided the lowest returns, but also the lowest volatility, among the asset classes. Gold has been a volatile asset class, with returns that have varied significantly over time. REITs have been a relatively high-returning and high-volatility asset class, reflecting the cyclical nature of the real estate market.

However, these historical averages do not tell the whole story. The returns and risks of each asset class can vary significantly from year to year, depending on the economic and market conditions.

There is no clear pattern or ranking of the asset classes over time. Some years, stocks outperform bonds, cash, gold, and REITs, while other years, the opposite is true. Some years, emerging markets lead the pack, while other years, they lag behind. Some years, gold shines as a safe haven, while other years, it loses its lustre. Some years, REITs boom as property prices soar, while other years, they bust as property prices collapse.

How to Manage Risk and Reward in Your Portfolio

So, how can you use this information to balance your portfolio for long-term success? Here are some tips and strategies to consider:

• Know your risk tolerance and return objectives over a time horizon. Before you invest, you should have a clear idea of how much risk you are willing and able to take, and how much return you need or want to achieve your financial goals based on a time period. Your risk tolerance and return objectives may depend on factors such as your age, income, expenses, savings, time horizon, and personality. You should also review your risk tolerance and return objectives periodically, as they may change over time.

• Diversify across asset classes, sectors, geographies, and styles. One of the most effective ways to reduce your portfolio risk and increase your portfolio reward is to diversify your investments across different asset classes, sectors, geographies, and styles. By doing so, you can reduce the impact of any single asset class, sector, geography, or style on your portfolio performance, and benefit from the different sources of return that each one offers. For example, you can invest in a mix of stocks, bonds, cash, gold, and REITs, as well as in different industries, countries, and market segments, such as value, growth, and quality.

• Adopt a long-term perspective and a disciplined approach. Investing is a marathon, not a sprint. You should focus on the long-term performance of your portfolio, rather than the short-term fluctuations of the market. You should also follow a disciplined approach to investing, such as using a buy-and-hold strategy, a dollar-cost averaging strategy, or a rebalancing strategy, to avoid emotional or impulsive decisions that may hurt your portfolio performance. By doing so, you can take advantage of the power of compounding, which can significantly enhance your portfolio returns over time.

• Seek professional advice. Investing can be complex and challenging, especially in uncertain and volatile times. You may benefit from seeking professional advice from a qualified financial planner, who can help you design and implement a portfolio that suits your risk tolerance and return objectives, as well as provide ongoing guidance and support.

In summary, risk and reward are two sides of the same coin in investing. You cannot have one without the other. However, you can manage your risk and reward by understanding the historical performance of different asset classes, diversifying your portfolio, adopting a long-term perspective and a disciplined approach, and seeking professional advice. By doing so, you can balance your portfolio for long-term success.

What is Inflation? And Why you Should Be Concerned…

Last week, I had a great conversation with a mate whilst we were away for the Easter long weekend. Simply put the conversation was about why the Reserve Bank of Australia was hiking interest rates so high and so fast, causing massive heartache and problems for those with mortgages.

Now, I am not an economist, but based on my studies, I have been able to learn a thing or two about the macroeconomy. Therefore our conversation, simply put, tailored around interest rate hikes not just being about inflation, even though it is the core reason for increasing rates. But today, we don’t want to go into the intricacies or the complex system that makes up our macroeconomy and interest rate decisions, today we simply want to understand…

What is inflation? And why should you be concerned with increased levels of inflation?

Firstly, let’s take a look at the defintion of inflation and then lets unpack it from there.

The Reserve Bank of Australia (The institution involved in trying to stabilise the economy and the Australian currency) states, “Inflation is an increase in the level of prices of the goods and services that households buy. It is measured as the rate of change of those prices. Typically, prices rise over time, but prices can also fall (a situation called deflation).” [1]

Therefore, we can safely say that inflation is based on the increase of goods and services across the economy, as resources, wages and spend on research and development increase, the cost of creating a product or service also increases.

The increased cost of products and services will get passed on by companies and businesses to the consumer (us), so that way the extra cost does not eat into their profits significantly, because without profit, the company would eventually lose shareholder sentiment and after a while lose the ability to remain solvent.

Hence, a low level of inflation is seen as progress, it keeps the economy of a country moving forward and growing. We have had this in Australia for the last 10-15 years, whereby inflation levels have been constantly sitting between 2-3%.

However, over the last twelve months, we have seen inflation grow to the highest levels since 1990, whereby the annual inflation rate for the December 2022 quarter was sitting at 7.8%. (See graph below)

Australian Bureau of Statistics (ABS, 2022) [2]

Now we know what inflation is, or roughly know that it is the increase of prices of goods and services on average across an economy, why should we care?

Other than the obvious reason that no one wants to see prices going up and up all the time.
Inflation, at the extreme level, can be detrimental to the stability of an economy, if you see abnormal levels of high inflation for a long period of time (Such as hyper-inflation) consumers will grow to expect everything will just keep getting more and more expensive. The expectation alone creates a self-fulfilling prophecy, whereby consumers will want to buy things now, before it goes up in price, increasing demand and therefore increasing prices again. Causing even higher inflation.

We have seen this happen in Argentina over the last twenty to thirty years, whereby they just hit over 100% inflation [3], considering our measly 7.8%, we don’t seem to be doing all that badly.

However, for those living in Argentina, they are seeing daily price swings of 10-50% on essential items, such as groceries and electrical goods. The Argentinian Peso, the currency used in Argentina, is seen as absolutely worthless, to the point where people don’t have any cash in the bank anymore.

There has been countless countries who have gone through hyper-inflation, starting in the Wiemar Republic in the 1930’s and more recently in Turkey and Zimbabwe.

Which brings me to why you should be concerned about inflation and why the RBA has been jacking up interest rates to bring it under control…

The higher inflation gets, the less your cash in the bank is worth.

Let’s use an easy example, one a lot of younger Australians are struggling with right now, the housing market.

A young couple who are trying to save for their first home are saving in cash, but the annual savings rate of cash for most banks currently is sitting between 4% to 4.6%. Whereas the inflation rate is sitting at 7.8%, meaning that your cash is losing value at 3 to 3.6% per annum.

Just by saving your money in cash, you are currently losing purchasing power, as inflation and price growth is outstripping savings growth. Therefore, the couple get desperate, they need to buy now, before housing goes up even more. That is where they go to a bank to get a mortgage, that way they can buy now and will be able to save on any potential increases in prices in the housing market over the next twelve months.

Due to buying now, rather than waiting, this has increased the demand of housing, as more people want to buy more houses. With higher demand, we have what we call a market pull, whereby demand is pulling prices higher.

In turn, creating that self-fulfilling prophecy of increased inflation I was talking about earlier.

We can see this in the price of goods and services as well, whereby 100 people want to buy one thing, but there is only enough supply of the goods or service for 90 people, this is what jacks up prices and causes inflation.

Now, there are multiple other reasons too much inflation is a bad thing, but that is one of the main reasons we have seen interest rates increase significantly over the last twelve months.

Now, inflation has been decreasing in Australia, but we wont see the real effect’s of the increased interest rates truly until the end of this year.

So what could you do to make sure you do not lose purchasing power over the next decade?

One thing you can do if you want to make real nominal returns over the next ten years is invest in the Share market, whereby there has been an average return of 9.8% per annum over the last ten years in the ASX 200 (A group of the top 200 companies in Australia).

By investing in shares, you will not see your cash get eroded away by inflation over the long term, rather you will see your purchasing power increase.

Of course, the Share market is a lot more volatile and you need to be in the market for a long period of time to see the returns to stay above inflation, but if you have a long term horizon and want to do what the wealthy do, invest your money in shares and stay a step ahead of inflation.

Until next time,

Take Back Control

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[1] - https://www.rba.gov.au/education/resources/explainers/inflation-and-its-measurement.html

[2] - https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/consumer-price-index-australia/latest-release

[3] - https://tradingeconomics.com/argentina/inflation-cpi

Disclaimer:

The information on the Take Back Control Website is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making an investment decision in relation to a financial product (including a decision about whether to acquire or continue to hold).

How to Create Great Habits- Health-Wealth-Life

Habits, everyone has heard of them, but not everyone truly understands the power of habits and how you can use them to Take Back Control.

Over the next few minutes, we will dive into creating better habits, habits that will get you moving more, focusing a bit more on your finances and helping you to improve your life 10 fold!

Firstly, what is a habit?

“Something that you do often and regularly, sometimes without knowing that you are doing it”- English Cambridge Dictionary

The definition of a habit sums it up pretty well, in fact we all have habits that we complete every single day, brushing your teeth in the morning and at night, eating dinner at roughly the same time, every day.

Driving a car is a great example, we have built up a series of habits to be able to drive from one place to the other, accelerating, breaking, changing gears, seeing brake lights ahead and braking ourselves.

All of which have been built into us as habits, from repetition, making mistakes and learning from them. Have you ever been driving your car to work, and time just flies by, you are hopping into the car, the next thing you know, you are at work. Or when you get into a “Flow” state at work, and the next thing you know, it is lunch time, but you felt like you just sat down. Another great example of completing repetitive tasks that you have built up as a habit.

That is because when you are completing a habit, your brain goes into automation mode, whereby it can complete most tasks from a subconscious level.

The reason we pack our habits into our subconscious comes down to flight and fight, as well as creating capacity for our brain to be used for much bigger problems and decisions.

What this means is that we really only truly use roughly 5% of our brain on a day to day basis to make important decisions and to create even more important habits.

Now, knowing that you have habits and that we use them every day so that you can leave the more important stuff to the conscious mind, we want to be able to use this as a way to Take Back Control of our lives and the habits we form.

To do this, we need to understand how a habit is formed in the first place, which is generally formed through what we call a “Habit Loop.”

The Habit Loop is how you Take Back Control of Life

The habit loop is very simple, in fact, our brains like things to be very simple and very repetitive, otherwise it takes a lot more energy to make new decisions or new habit loops. In the habit loop, we always start with a trigger, I have used this explanation quite a lot with nutrition clients, whereby you might start feeling bored or have nothing to do, so you open the fridge/pantry.

The trigger is feeling bored or having nothing to do at home, the routine is opening the fridge/pantry door and we can all understand what happens next…

We either crack open a “beer” or “have a snack,” even when we don’t need it, and that is the reward.

Now we know what the habit loop is, we can actually break that down and form a new habit, something that will not entail you eating every time that you are feeling bored.

You need to start at the “trigger,” which is the feeling of being bored or having nothing to do. When you feel this, you will probably find yourself in front of the pantry/fridge, about to open the door. What you need to do is stop yourself from opening the door, by asking yourself a question, “Am I really hungry?”

You need to move yourself from the subconscious to the conscious level, where you can make decisions, rather than just following habit loops you have built up over time.

If you can break the trigger, you can break down the habit and begin anew. Now the first, second, third… Even the 100th time, you may fail at breaking down the habit, especially if it is ingrained in you from a young age.

However, the key is persistence, to be able to fail and fail again, but keep trying and moving forward!

Another great example is spending money, in fact, I have seen a similar trigger bring on online shopping, whereby you may feel bored, or have nothing to do, so you open up your mobile or laptop and before you know it, you are on Amazon, Facebook or Instagram.

You are scrolling through your feed and ads keep popping up, these ads are targeted and they know your behaviours, they know that you are in a subconscious mind right now and they easily create triggers for you to begin a habit loop.

I have done marketing courses previously and I know how marketers think, they are always looking at ways to grab your attention to break the loop of scrolling and to get you to click on the product/service.

Once they have you, the likelihood of you buying and scrolling through the online store is very high, based on yur habit that you have built up and before you know it, you have spent $100-$500.

Again, to break the habit, you need to stop it at the trigger, to be able to do this, you need to leave your subconscious mind and move back into the conscious mind, which the brain does not like to do to conserve energy on the bigger decisions.

Hopefully, by delving into how habits are formed, you will be able to use this as a way to start breaking down some of your own habits that you want to stop doing. Which could be anything from smoking, to playing games all night, to alcohol, to eating too many snacks, to spending too much money.

You will most likely fail at the start, breaking down a very old habit is even harder to do, so I suggest that you start with a recently built habit, something that you have only just started doing. You will have to think on this, ask loved ones even, because you may not even realise you are doing it…

Once you have your first habit that you want to break, you will need to work hard to break it, because you are literally fighting against yourself!

The key is to be persistent and be okay with failure, see each and every failing as a lesson to be learnt and to strive to get better!

If you are in need of a bit of help trying to break down this habit, you can reach out to me anytime, just send me through a message on any of the social platforms,

Until Next Time,

Take Back Control

Wealth Tip -The MOST Important Number to Know

The end of the year is probably one of the busier times, it is not called the crazy season for nothing, but if you look and prioritise, you will find a few pockets of quiet. Time where you can set out for reflecting and most importantly, understanding where you are RIGHT NOW!

When it comes to understanding your wealth and understanding whether you are improving it or losing it, there is no more important number to know than your NET WORTH!

Before we go into how you can easily calculate your net worth, it would be pretty poor of me not to go through a few housekeeping rules surrounding your net worth first.

Rules to understanding Net Worth

1. Your Net Worth does not define YOU and who YOU are!

Your net worth is just a number, and when it comes to understanding yourself, there is so much more to you than just a number. Therefore, when you go to calculate your net worth for the first time, you may feel nervous, or even ashamed, but I want you to take a deep breath and just relax.

YOU are not defined by a number, you are not a bad person for having too much wealth or too little. Our happiness is all based on perspective, some will be happier with more, and some with less. Hence, when you calculate your net worth, just remember, it is just a number.

2. Your Net Worth is a Metric

Your Net Worth is a great way to see where you have been and to measure your wealth building over the years. A great example of this would be if you sit down each year and calculate your net worth, you can see how much your wealth has been building over time.

An exceptionally good way to do this is by using a graph, once you have calculated your net worth over a few years. Check out the below for an example;

Liv and my own Net Worth over the last two and a half years, since I have been tracking it!

3. Leave a Legacy

Everyone should know how much they are worth, if not for the very reason that it will make leaving your legacy to your kids, grandkids or family members that much easier.

(Sure, if you are in high school and you have $5,000 to your name, you know what your net worth is straight away, as long as you have no car loans or debts to family members, you will just have $5,000 in net worth.)

Understanding your Net Worth is truly important, because when you make a will, you need to understand all the intricate details or your assets v. liabilities, not to mention insurances and a few other details. Your net worth will be the legacy you leave behind to loved ones, so why wouldn’t you want to know your Net Worth?

4. Do not compare your Net Worth to anyone else, you are playing a solo game!

I deliberately left out the $ figure in our own net worth graph above, so that you would not be able to compare, because there is no point leading your life in comparison to others. For your own happiness and sanity, it is best to be in the game without looking at the other players.

Social media has truly made our lives a lot more superficial and highlighted judgements, comparing to each other and even more dangerously, an us vs. them, or you vs. me, mentality.

We are all playing our own game, we are all just journeying through our lives at our own pace and you do not need to compare your own net worth to others. See an article that states the average net worth for your age? Don’t read it, we are all in this together, experiencing things in our own way, with our own history and perspectives.

The more you compare, the more likely you are to move into dangerous territory, like “keeping up with the Jones’s” territory, where you will take on more risks like getting personal loans and increase your liabilities. Of course, it all comes out in the wash, once you have calculated your net worth, you will know whether you are trying to “Keep up with the Jones’s”!

So, how do you calculate your Net Worth?

There are a heap of great Net Worth Calculators online, but I must say, one of the better and more simple ones has been created by the Australian Government.

The Money Smart : Net Worth Calculator

I have been using the Money Smart calculator for the last two and a half years to track our Net Worth and it has been working a treat, it is simple to use and will take you less than five minutes.

All you need to know is your bank balances, super balances, investing balances, loans and approximate value of your cars/boats/furniture etc.

During this day and age, you can come up with most of those figures at the click of a button and then once you have calculated your net worth, you can simply print the page or save it as a PDF on your computer like I do.

You have to do the work though or Hire a Financial Planner!

The hardest part of calculating your Net Worth comes down to discipline, doing it every year!

A lot of people would struggle to sit down at the end of the year or end of financial year and actually calculate their Net Worth. Which is why having someone to be accountable to is truly important, someone such as a Financial Planner who can do the calculations for your and review it once every year.

A Financial Planner will be able to reassure you and keep you on track with your strategies of wealth building, so that your Net Worth never goes backwards.

If you are one of those people that don’t like money or don’t like numbers, or you have a much more complex situation with investments, trusts, self-managed super funds etc. Hiring a Financial Planner will save you a whole heap of time, keep you accountable and make sure that you don’t so anything silly along the way that could affect your Net Worth.

Now you know what to do, so you just need to TAKE ACTION!

If you have any questions on calculating your Net Worth or need any help with it, please reach out to me - can do so via LinkedIn, Instagram, Facebook etc.

I would be more than happy to help where I can,

Until Next Time,

Take Back Control

How to Make Sure Christmas Doesn’t Break the Bank!

T-B-C Special Christmas Edition

Here at Take Back Control, I have been running around, getting those last minute Christmas gifts and have almost finalised everything for what has to be the best time of year…

But, it can also be the most expensive time of year, if you let it. Which is why this special Christmas edition is going to focus around making sure that Christmas doesn’t put you out financially, leaving you reeling and feeling horrible when that Christmas hangover hits.

We have all been there before, when we wake up on the 2nd of January in the new year and think, wow, where did all my money go?

Or worse yet, you have to deal with paying back a heap of Buy-now Pay-later apps and personal loans, just to get those gifts that make people “feel” like you love them.

So, do you want to know the trick to not breaking the bank at Christmas time?

Ok, let’s see if I can save you a nasty Christmas hangover (and not the alcoholic kind)…

Tip 1: Communicate with Your Family and Friends

Probably the hardest task to do off the bat, because I believe in getting the hardest things done first, the rest is easy after this. You need to have a conversation with anyone who you will be getting gifts this year and having dinner’s, lunches, drinks with on Christmas day etc.

You need to talk to them about creating a budget and planning how much we will spend on gifts or food/drinks etc.

Without having this conversation, and coming to an agreeable amount, Christmas can be difficult.

You need to make sure you ask first, and don’t just tell people what to do, which means getting in early, before people have brought gifts.

Asking simple questions like;

• How much are you wanting to spend on gifts for Christmas?

• How are we pitching in for Christmas Lunch/Dinner?

• Should we just bring our own food and drinks? (Probably the best way to control your own spend)

The best way to do this is through talking with the host of Christmas this year or making a group chat. Having a family group chat can be great for many things, we have one with just my brothers in it, where we ask questions about what is everyone getting for mum and dad etc.

Coming together and discussing it, you learn more about each other and can become even closer because of it.

Tip 2 - Bad/Dirty Santa/White elephant- The game that will save you $$$

The best way to save money I have found, which has become a bit of a family tradition for us over the last three to four years, is playing a game we call Bad Santa Kris Kringle. There are many other names for it, but I will leave a link below for the description of how to play the game.

- How to Play Bad Santa -

In fact, our friends have even suggested it this year, which means rather buying a $30-$50 gift for each person, costing potentially $120 to $200 or more, you can buy one gift, have fun playing the game and enjoy each others company even more.

Let’s quickly do the math, say you have a family of ten, a group of friends that number as 8, that is potentially 16 people that you will need to buy for. Say you have a budget of $30, that is still $480 of gifts you have to buy, but most of the time if we are honest, it is more than $30. $50-$100 each sounds probably about right these days, which could make it a very expensive Christmas ($800-$1,600 just on gifts alone).

Suggesting this to generally the mother, or mother-in-law, because we all know who is boss during Christmas time, will leave you with the highest chance of success for the family.

My friends who suggested it simply created a group chat labelled ‘Friendsmas’ and we even chose a theme for the gift buying.

The game is even fun with kids, but of course, we all know Santa is coming for the kiddos.

Tip 3 - Create a Budget!!

Pure and simply, making sure that everyone is on the same page and knows what the maximum to spend is on gifts and food is pivotal to not breaking the bank over the Christmas period.

My brothers all agreed last week we wouldn’t spend more than $40 on each other this year, and that goes for the whole family now, as cost of living has really hit a few of us in the family.

We are accepting and feel better for communicating it with each other, not to mention, it has brought us closer together, without judgement of one another’s situations.

We are all bringing our own food to our little Christmas get away to Phillip Island for the Harvey family and have delegated roles and spend to everyone for our Christmas Eve dinner for the Perryman/Joyce family.

Tip 4 - Kids Gifts

The hardest part about Christmas has to be what Santa gets the kids for Christmas, and can definitely blow out to be the most expensive.

Setting expectations early is pretty important, as kids will always want more and more. I still remember wanting the most expensive thing in store, until I learned about the value of money.

If you begin buying them hundreds of dollars worth of gifts from a young age, they will always expect more. Therefore, one neat little trick that I remember from my parents is saying that Santa only gives you one gift. Every boy and girl only gets the one gift and of course you can base it around whether the child has been naughty or nice, but that is not the best way to go about it.

Because more than likely you will find Harry, the meanest kid in the school, gets the best presents and then your child will look at their gift and wonder what they did wrong.

Santa could also just get them something small, from the North Pole or something that is truly memorable and magical. You can leave the “big gifts” to those that are from “Mummy and Daddy” or “Mummy and Mummy” etc.

Instead, start teaching your children about the value of family, connections, experiences and place a lower value on material goods. You need to do this from a very young age, and you yourself need to lead by example. If you have all the latest gadgets and the impeccable furniture, your kid will want that too, but even more than that.

Maybe even start getting your children to save up for Christmas if they truly want something big and expensive and tell them you will pay the other half, what a great way to teach the kids the value of money and the time it takes to accrue it.

Tip 5 - Make a list and check it twice!!

I mean the big man himself is a list person, and if it works for Santa, why can’t it work for you too. You need to sit down, write down all the people/bad santa gifts that you are going to buy for and start brain-storming ideas.

Why waste all the time looking around the shops and dealing with the crazed people rushing about, when you can get in, get the thing you have already put down on paper and get out!!

If you are to do none of the above this Christmas, at least do this one, because if you don’t have a plan, you plan to fail!

________________________________________________________________________________________________________

Hopefully you can use some of the above to save some $$$ over the Christmas season, even if it is just one of the tips, I am sure it will help.

We have one more blog before the end of the year, maybe two more depending on how much time I can find during the holiday rush.

Therefore, if you don’t read another blog by the end of the year, I wish you all a very Merry Christmas and Happy New Year!

From my family to yours, have a safe festive season.

With love,

Joel Perryman

Take Back Control

The Most Important Number to Know if You Want Financial Freedom!

We all want to be able to live a life on our own terms, to be able to wake up one morning and say, '“I am going to do what I want to do today…”

Getting to the point where you can wake up, go for that two hour morning hike, or go to the gym whenever you want to, eat breakfast at your favourite café or be on a plane to your dream holiday destination, it takes knowing a certain number.

That number comes down to some simple math really, it comes down to knowing your net worth and whether your net worth can pay for your dream lifestyle (or dream expenses).

What is your net worth? You hear about Jeff Bezos having a net worth of $140 billion USD, but what exactly does that mean? Does that mean that he has $140 Billion dollars sitting in a bank account? Imagine if he had $140 Billion in cash, how many rooms would that fill up in his mansion.

No, net worth comes down to whatever you have in assets minus liabilities, meaning that whatever you own which could potentially reap monetary benefit in the future minus the debts or mortgages that you have taken out to own those assets.

A great example would be a house, you may have spent $950,000 on a new home, let’s keep it a nice round figure and forget about stamp duty, conveyancing fees etc.

You have $250,000 in cash to pay for said home and you acquire a mortgage from a bank to pay out the difference, in this case $700,000.

The asset before you signed on the dotted line was $250,000 in cash, and you had no liabilities. Now that you own your home, you now have $950,000 in assets, but you have a liability of $700,000.

In both instances, you still have a net worth of $250,000. Scenario one, you had cash only, scenario two you minus the debt/mortgage from the asset, so $950,000 - $700,000 to make a net worth of $250,000.

Now you know your net worth, you can start to create a plan around building the net worth you will need to be able to gain enough financial certainty/independence to be able to live your best life, without worry of running out of money before you die.

That is all retirement is, isn’t it? The ability to pay for your living expenses, without concern of outliving the money you have. Unfortunately, not everyone who retires actually has enough net wealth to be able to do this. Which is why knowing your number is so important, what number do you ask?

The amount of net wealth (net worth) you will need to be able to live in retirement, which takes a bit of planning and understanding of the average lifespan in Australia (the endpoint).

You have to start at the end point, when it comes to attaining or achieving any goal, you need to know what the end will look like.

How do we know how or when we will die though? Well, you don’t and who would want to know anyhow, imagine if you were told that you would die tomorrow, and you had no way to change it?

But, we can make estimations based on statistics and averages, whereby the average Australian male life expectancy right now is just over 81 years old and females are just over 85 years old. [1]

Now you know that you will most likely live until the age of 81-85, we will add on 7 years, just in case, so that if you are a male, you will most likely live until age 88 and female to the age of 92 years old.

We have the end date, not to say that it is concrete, you may live to 100 years old, but based on the stats, that is unlikely, for now…

Once we have the end, we will need to ascertain your dream life’s living expenses, how much will it cost you each month to live the life of your dreams? $5,000 per month? $10,000 per month? Maybe $20,000?

Let’s say that you have a simpler lifestyle and don’t have big plans to travel the globe and party everyday, you simply enjoy the presence of family and friends, will go on a few trips a year and just want to be able to go out once or twice a month to a nice restaurant.

Lets assume for now that the holidays will cost you $10,000 per year, gifts for children/grandchildren may come to $3,000 per year, living expenses may come to $2,200 per month (assuming that you own your home and don’t rent.) Maybe you still have children in schooling, education costs may come to $10,000 per year. Entertainment spending comes to $300 per month.

Adding all of that up, your number that you need to know before you can truly find your net wealth number that you need to attain to retire is…

$53,000 per annum or $1,019.23 per week.

You would need to be earning that much from investments/drawing down from assets per week or annually to be able to survive and that does not include inflation that continues to increase living expenses each year.

Not to mention, things can go wrong, emergencies or accidents occur and that costs money too. Therefore, you may need extra cash to fall back on, just in case.

Continuing with the example above though, we won’t include any more emergency cash bucket or include inflation etc.

Assuming that you are 50 years old, how much would you need in net wealth to survive off of $53,000 per annum? (Not including your home, I mean, you need somewhere to live.)

Based on the life expectancy averages above, a male will live another 38 years and a female another 42 years.

A male would therefore need… $2,014,000!

And a female would need $2,226,000!!

Sounds like a hefty sum of cash, but of course, that is why you would invest and make your money work for you. By investing your money and making it work for you, most couples would actually only need $402,000 to drawdown $64,000 per year, according to the Super Consumers Australia. (Assuming retirement at age 65 though, not 50 years of age) [2] I will not go into investing today, but I will touch back on investing in some future blogs again.

Therefore, in our example above, the net wealth the individual would need to be able to live in their home and live the life they want, would just be the number above plus the $950,000 from your home. For the male, the net wealth would be $2, 964,000 and for the female, it would be $3,176,000 **Again, not taking into consideration increase/decrease in home value for simplicity sake.

Now you know the number you need, you can track how far off or how close you are to attaining the goal through your net wealth.

A great way to do this is to use the money smart net worth calculator, it is a simple and easy way to calculate your net worth once a year to see how you are tracking on your way to attaining the number you need to live your best life!

Just click on the link to take you to the site - https://moneysmart.gov.au/managing-debt/net-worth-calculator [3]

By calculating your net worth once a year, you will be able to keep track of how you are doing, and by doing that, you can change behaviours to keep you on track.

As long as that net worth is increasing each year, you are on track to achieving that retirement goal and taking back control of your life fully.

Until next time,

Take Back Control

**All expenses are examples only, and do not constitute a real life scenario, so please do your own due diligence and work out your own living expenses and net wealth. Or speak to a trusted professional advisor who can help you do that as well.

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[1] - https://www.abs.gov.au/media-centre/media-releases/life-expectancy-hits-new-high

[2] - https://www.superconsumers.com.au/retirement-targets

[3] - https://moneysmart.gov.au/managing-debt/net-worth-calculator

How to Choose the Right Investing Vehicle for You!

Getting ahead of the curve is not easy, it requires will power, discipline and a plan to execute. With the last two articles, I have delved into the most essential part, which comes down to paying yourself first and minimising your tax through understanding the tax system.

Finally, it comes down to where can you put your money that you have saved on tax and paid yourself first?

What is the best assets that will serve you over the next 10-30 years? To help you make your money work for you, rather than working for money…

Let’s list out the options, starting from conservative to more risky;

1. Savings accounts and term deposits

2. Bonds and loans

3. Commodities/National Currencies (Gold, USD, oil, silver, copper, etc.)

4. Real Estate/Property

5. Shares in a company or Stocks

6. Cryptocurrencies

Every asset or investment vehicle is just that, a vehicle to help you where you want to go. Therefore, it pays to understand where you want to go first. To help with that, I would highly suggest having a read of one of my first ever blog articles here.

Now you have created a location, an end point, a dream to achieve, lets look at the advantages and disadvantages of each asset class and investment vehicle.

Starting with Savings Accounts and Term Deposits…

Advantages

• Minimal risk, you will not lose any money

• Will get paid interest, depending on the bank and features

• Can lock in an interest rate for a specific time-frame if you have a term deposit (Great for when rates are decreasing)

Disadvantages

• Potential to lose value on your cash, for an example, right now inflation is 5.2% and the max interest you can earn is 2.60% (ING current rate as of 12th of July) on a standard savings account. Meaning you will actually be losing 2.6% of purchasing power and value on your cash by just sitting it in a savings account.

• If locked into a term deposit, not having the option to pull out cash quickly without potential for paying fees etc.

• Could potentially lose access to all of your cash if there is a liquidity crunch in the markets, whereby banks lose the ability to pay deposits. (A real fear back in the Global Financial Crisis. In Australia, $250,000 is guaranteed by majority of banks thanks to the government)

Bonds and Loans…

Advantages

• Greater returns than savings accounts

• Mostly guaranteed payments with a locked in rate (Corporate bonds can be more risky, but with a greater return potential)

• Minimal risk, much like a savings account, especially in Treasury Bonds (A loan to the government)

Disadvantages

• Difficult for retail investors like you or I to invest in individual bonds, therefore you need to look into bond funds.

• Bonds can be complex and can be quite price sensitive to interest rate hikes or decreases.

• Can also be sensitive to market sentiment, as seen by the increases in bond markets recently, whereby the markets are betting on higher rates.

Commodities/National Currencies…

Advantages

• Generally seen as an inflation hedge (Although national currencies are quite often weaker as inflation increases generally)

• When inflation is high, we start to see that commodity prices increase.

• Can be lower risk than shares, due to the price stability compared to listed companies.

Disadvantages

• Offers no actual value or payments other than the price, therefore your hopes ride on the price increasing.

• Can be more risky and more volatile depending on market sentiment at the time, as well as the global environment and a big emphasis on supply and demand (Economics).

• Can be fairly illiquid and difficult to sell, depending on how you buy (For eg; if you buy solid gold bars etc.)

Real Estate and Property

Advantages

• Has been the greatest wealth builder in Australia over the last 30 years (But does not deliver the greatest returns on average per annum)

• Generally less risky compared to shares, but higher risk compared to Bonds and savings accounts.

• Can have great tax minimising benefits, especially for high income earners

• Gives you a roof over your head if buying a home to live in

Disadvantages

• Cost of maintenance and upkeep

• Interest rate risk, whereby increasing rates increases the cost of loan servicing/costs

• Very illiquid, as it can be difficult to sell and takes time to sell the house or commercial property.

• Especially right now, the cost of owning a home or investment property is quite high, with prices at all time highs.

• Taxes on buying property are quite high

Shares of a company, Listed Managed Funds, Exchange Traded Funds

Advantages

• Has the greatest average per annum rate of return over the last 100 years

• Very liquid, you can buy and sell very quickly most of the time

• You can use a dollar cost averaging technique, which has become really common over the last five years to hedge against the volatility of the markets. (A technique used over the long term, roughly 7-30 years)

• Improves the living standards of people through companies and firms being able to use capital to solve solutions

• Dividend payments can be paid out, especially amongst the blue chip (Big market cap) companies.

Disadvantages

• Prices can be highly volatile in the short term and therefore are high risk and highly susceptible to market sentiment, based especially on forecasting.

• Due to the asset being very liquid, can be vulnerable to behaviourial bias, whereby if market prices decrease, the fear of loss leads to selling at the low prices, creating a potential loss.

• Companies can go into admission and you can lose all of your money

• Brokerage fees (the fees paid for buying a share, ETF etc)

• Capital gains tax is set quite high

Cryptocurrencies

Advantages

• Over the last five years especially, there has been a major bull run on crypto assets, which has made a lot of people quite rich

• Fairly liquid, when market sentiment is high

• There are a lot of Crypto companies doing great work and offering very high interest on their coins

Disadvantages

• Very volatile, more high risk than most companies or stocks

• Has no real value, whereby payments are not made and regulation is very low

• Very susceptible to market sentiment, as shown quite recently, whereby bitcoin was seen at a high of $68k and is now below $20k at time of writing

• Can be illiquid if there is a run on the coin, much like actual cash from a bank, when people pull all of their actual cash out of the coin and the value goes to zero (losing all of your money)

All of the above is a very simple list of the advantages and disadvantages, which as you can see can be quite confronting, however if you have the risk appetite, you can see some great returns on the money you have worked so hard to save.

From here, you simply need to understand how you handle risk and the idea of losing money.

The more risk you can take on, the more likely you can attain greater benefit, however the more likely you are also to lose your money. Therefore, understanding your ability to handle risk will determine what asset class or investment vehicle is best suited to you!

To understand your ability to handle risk, I would advise that you enlist the help of a trusted Financial Advisor, who will be able to guide you through the complexities of choosing which asset class and investment vehicles will be best suited to your risk profile and goals.

Which leads to the end of our Getting Ahead of the Curve Series, hopefully you have been able to take something out of the series and I truly want to see that you can use some of what I have discussed to improve your ability to get ahead!

Until next time,

Take Back Control

The Number One Secret to Becoming Financially Secure…

Getting Ahead of the Curve: Part 1

Pay Yourself FIRST!

To actually pay yourself first, it requires a few things, the first being a mental shift, a shift in consciousness or a shift in perspective. If this blog can help you to have a light bulb moment, a flick of the switch whereby you take action and start paying yourself first, my job would be part way complete.

A mentor once told me, “the reason you are still broke is because you are paying everyone else first, you are paying your bills, you are paying the local cafe, you are paying the supermarkets all first. You need to shift your mindset from paying everyone else first, to paying yourself first!”

When it comes to finances, you have to think of yourself, you and your partner, your family, as a corporation or business.

That is the another bit of advise I was given by my mentor a long time ago, which has helped me to truly get ahead and I hope will be able to help you to follow in my footsteps by truly taking the first step to becoming financially secure and potentially even wealthy!

That one bit of advise was what gave me my light bulb moment, because in business the number one rule to being an owner is to pay yourself first. However, it takes a lot of strong will and discipline to keep paying yourself first week in, week out.

I use the athlete analogy quite often, as I am a personal trainer, CrossFit Coach and love sport, but it is probably the best analogy to use as well, because athletes have such great discipline. Much more than the general population, like you or I.

Athletes need to be disciplined in their training schedules, their eating habits, the lifestyles they live, especially seeing as they are in the spotlight and looked up to as role models. The sacrifices they make, for the love of their sport, it is truly inspirational. That discipline is but an iota of what you and I need, because all you have to think about is sitting down every week, fortnight or month, depending on how you get paid, and transferring a small percentage of what you get paid into a savings account you do not touch. Which probably takes 15 minutes, whereas athletes commit to 40-100 hours a week, cooking, eating, training, sleeping and doing everything right.

But, just like an athlete, you can have speed bumps in the plan and process, where an athlete may get injured, you may have things happen that you were not expecting…

What happens when you get those unexpected speeding fines? Or you are seeing fuel prices soar?

Food is getting more expensive, inflation is going up and will only go higher, so how do you keep to paying yourself first, when you need more money to live and get the necessities?

You will need this discipline to stop yourself from reaching into the account you should be leaving alone, and the best thing to do here is to have a strong reason WHY you should not touch that account.

Having a goal for saving is just another tool in your arsenal to help you remain strong willed and disciplined.

Having a goal or reason to pay yourself first will be the only thing that will keep you going when times get tough. It could be as simple as saving for that holiday to Fiji or it could be more complex, such as achieving financial freedom and retiring when you are 45 years old.

Having that goal is great, but it needs to be anchored to strong emotions, that are linked to pain and pleasure. For an example, you may want to retire by 45 years old, but you need to have a really strong reason as to why you want to retire by that age. Is it because you truly dislike your job? Do you want to be able to spend more time with family? Do you want to give back to your community and you believe retiring early will give you the time and money to do so?

Your goal is of your own making, if you need help with regards to creating your own vision of your life, check out my first ever blog!

Other than strong will and discipline, you also need a sound plan, a process that you follow, week in, week out. Only a strong process will keep you from falling back into old habits.

Going back to treating yourself, your family, as a business, what do all good businesses have, all successful businesses anyhow? They have a strong process and systems to keep the business running.

Which is what you will need, and I am going to share with you the process I use every fortnight and month to be able to keep paying ourselves first (My wife and I, plus our dog too, he is apart of the family).

1. The hardest part is starting, and you need to figure out how much you would like to save/pay yourself first, as well as how much you need to live. That is why creating a budget to start is a great way to understand where you are at, to take the next step forward in your finances. You can follow my budget process right here, just click that link and follow it step by step.

2. Once you have complete your budget, you need to agree upon a number that you will save each week, fortnight or month that you can commit to for the whole year. (This number will vary on your circumstances, hence why it is necessary to complete a budget.)

3. You need to carve out 5-20 minutes each week or fortnight to commit to paying yourself first. Simply, once you get paid, take out the amount that you have agreed upon, with yourself, your partner or family, and transfer it to an account that you will not take from. Or you can invest it, but I will go through this later on.

4. It is best to also have another savings account, whereby you can commit a small proportion to big expenses that may come up out of nowhere. I call it an emergency savings account, where any fines or big expenses that pop up out of the blue get paid from this account.

5. Repeat the process and review your budget every year, as life gets more expensive, or your wage increases, the number you can pay yourself first will change!

If you can continue to complete these 5 steps, paying yourself first will be full proof, now of course, some of these steps may not suit your situation, or you may not like numbers. That is where having someone else look over your circumstances and budget might be a good idea.

The last step comes down to figuring out how to achieve your goal, which comes down to understanding the investment vehicles, and the complexities of risk.

Understanding the markets and understanding where your money should go to get the best outcome for you is truly a minefield, that is when having a great Financial Advisor by your side would help significantly. They know the ins and outs of the markets, they have been taught the complexities of financial products and have the processes to help you achieve your goals.

I will delve into how to look out for a great financial advisor in a new blog after this series, so look out for that.

However, I will also be going through the investments vehicles you can use to help you achieve your goals and dreams in part III of Getting Ahead of the Curve.

But next week, I will be taking you through what to expect of your tax this year and some truly simple ways in which you are entitled to minimise that tax bill or receive more of a refund from the tax you have paid in Part II.

Until next time,

Take Back Control

How To Be Wealthy and Change Your Life Right Now!

We all wish we could wake up one morning and all our problems would be gone, (I don’t, how boring would life be then…) however unless winning the lotto, a 1 in 8 billion chance, there is nothing that can significantly change fortunes over night.

Therefore, rather leaving life to chance, I have drawn on learnings from some of the wealthiest people in the world, from Jim Rohn, Anthony Robbins, Elon Musk, Warren Buffet and Jeff Bezos, to share with you how you can take action on changing your wealth right now!

The only difference between the women and men who are significantly better off than you right now is simply their mindset and how they look at the world differently.

Let me tell you a quick story on how someone was able to change their fortunes over a year and going from being in $11,400 in debt to paying down that debt and owning a house within the next four years.

The catalyst for that person came down to two things, one of which was the shame of seeing -$0.07 in their bank account and two, being unable to help a friend start a venture and supporting that friend.

So what changed? What changed from that person spending $12,000 per year on eating out, partying and getting themselves into $11,400 into debt, to owning their own home and successfully taking a step on the path to greater wealth?

Simply, it was a mindset shift, a shift from being the victim to being a person who took responsibility for their lives, their income and spending.

(If you have not guessed it, that person from above was myself, I got into a few car accidents that accrued nearly $5,400 in debt from the insurance companies and then also borrowed $6,000 from a family member to start a business.)

The difference between the wealthy and the poor is simply their mindset, yes other factors do come into play, such as where you grew up and the family environment. However, if you are stuck in a scarcity mindset, you will never be able to move into a mindset that can handle one of abundance.

Therefore, here are the top 3 mindset shifts and belief systems that you need to work on, to start changing your life, improve your wealth and your lifestyle;

Pay Yourself First!

That seems like a pretty simple one, but you would be astonished at how many people tend to pay the big fashion companies, or shoes stores, or car companies first…

As soon as you get paid, you should be paying yourself first, meaning taking a percentage of your wage and transferring it into a savings account or investing it for the future.

You just need to do a little bit of math, work out how much you roughly need to pay out in debts, food, bills, etc. And what you have leftover, pay into a savings account that you cannot touch. Becoming wealthy is just a mindset shift from being a consumer, to being a creator, a creator of your own wealth through self-discipline and giving back to your community.

Take Back Your Time!

Every day, you should be prioritising your time towards tasks and activities that will take you closer to your goals and ambitions. Not only that, but also delegating tasks and activities that is below your hourly rate. The rich get richer because they delegate roles and responsibilities that need to be done, to free up their time for the tasks and activities that are more important.

For example, you could be working full-time, however, you do not earn enough from your full-time job and therefore want to start a side-hustle or sole trader business. But, you have a family, two kids, a partner that also works full-time and house chores that need to be done.

If you could earn $100 per hour from your side-hustle, why would you not just pay a cleaner $35 per hour to clean your house?

You are still up $65 per hour!!

Therefore, take back your time, by delegating roles and responsibilities, if you are worth $300 per hour, don’t waste your time on tasks that you hate doing that are worth much less!

Finally, the most important mindset shift: You MUST Become Obsessed with Improving Your Income Streams

The really wealthy do not become wealthy just by doing one job well, they diversify the risks of losing said job or failing said business by putting earning their money from different streams.

Starting with your job or business!!

First, if you need to earn more money, look to asking for a pay rise or if in business, look to set some targets to grow the business more efficiently. Once you have developed this income stream, to the point where it has no more growth apart from inflation, you should look elsewhere for a second income stream.

The key is knowing when to do this, if you have a business, it may take a bit longer to grow your income, or it could grow really quickly, depending on the type of business, consumer sentiment and many other factors. If you have a job, it is as simple as asking for that pay rise and either getting it or not.

Once you develop a second, third, fourth and maybe even fifth income stream, you go back to the first mindset shift of paying yourself first.

Hopefully that has given you a few things to think about, as it sure changed my life and helped me to Take Back Control!

So until next time,

Take Back Control

How to Begin Investing with as Little as $5 Today!

Wow, we are already halfway through the Beginner Investing Series and I have thoroughly enjoyed writing about some of the things I have learned along the way from my own investing journey.

Of course, this particular series was always meant to be simple and basic, but it was meant to get right to the crux of what I wish I had known before I started investing.

Today though, I will go through how my investing journey began, to give you a great picture of how you to may be able to to start investing with as little as $5.

First of all, my investing journey began after reading “The Barefoot Investor- The only money guide you will ever need.” [1]

Not unlike what you are doing right now, by reading my blog series, I started by just simply seeking to understand how I could make myself more financially savvy and also so I could save up a deposit to buy a house with my wife.

Reading the book, produced a spark that led to me taking action and implementing the steps to help my wife and I to save a deposit for our house, start investing outside of Super and to truly set ourselves up financially.

The spark gathered momentum and I started delving deeper into understanding finance, reading Tony Robbins, “Money: Master the Game” [2] was taking it to another level again. (For a more basic and stream-lined version, check out “Unshakeable.” An amazing read and a must if you want to start investing.)

I can hear you saying, ok but where can I start investing right now, for as little a $5?

Well rest-assured, here it comes…

I want to introduce you to the world of micro-investing!

Yes, if you believe it, you can actually invest your money in an app starting with as little as $5, some may even be as little as $1.

I started my own investing journey using the micro-investing app called Spaceship [4] and I invested using Spaceship up to the point where I felt finally comfortable and knowledgeable enough to take on the markets myself.

Why did I do it and therefore why should you consider it as well?

1. Time in the market is more important than timing the market

What do I mean by this, I mean that over the long-term, you are more likely to earn a good solid return by having your money in the markets than if you were to try and time it by waiting for everything to dip.

I learned that its better to start investing now and micro-investing apps actually make it possible, rather than waiting to save up $2,000-$5,000 to invest into an ETF, you can start NOW!

2. You can learn by putting some skin in the game!

Learning about your own behaviour whilst having some money in the market was probably the most important aspect I learned and what you can learn with small amounts of money, rather than risking big amounts to start with.

You can learn how you behave when their is a correction in the market (when shares drop by up to 10%, meaning you lose 10% of your money) which is vital to your investing career. Do you pull out because you don’t want to see yourself losing more money? Or do you wait it out until the market goes back up, no matter how long it takes?

Learning this early on has been vital to my own investing success so far. In the last year alone, my own portfolio has grown by 20% and retracted by 10%, but if you do the math, it means it is still up!

3. Finally, it gives you time to research how the market works!

The most important aspect of micro-investing, at least what I got out of it the most, was that I had time to put some money in the market, whilst researching and learning more and more.

You have first-hand experience and you can delve even deeper again by researching into different investment funds, listening to podcasts and learning as much as you can about investing.

If you don’t want to do this, you probably are not cut-out to do active investing, as you need a sound amount of research and knowledge to actively invest.

You may be better off, when you have built up enough money in your micro-investing portfolio, to either seek an advisors guidance or to sink most of your portfolio into ETF’s (exchange traded-funds) that follow a specific index.

I will actually be running through the difference between ETF’s and managed funds in my next blog, as I believe it is really important to understand.

I hope that helped you and if you are interested in micro-investing, it is best to do your research, as Spaceship is not the only app you can start investing with. Another product you could look into is Raiz, but I would highly suggest reading through the PDS and understanding what each investment in the app entails.

At the time of writing, I do not hold any funds in any micro-investing apps.

Until next time,

Take Back Control.

If you have found this Blog valuable, I would love it if you shared it with friends and family. The more the merrier, as I want to see each and every one of you learn to Take Back Control of your Life-Health-Wealth !

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References:

[1] - To check out Scott Pape’s book, click the link - https://www.amazon.com.au/Barefoot-Investor-2018-Update-Money/dp/0730324214/ref=asc_df_0730324214/?tag=googleshopdsk-22&linkCode=df0&hvadid=341744699688&hvpos=&hvnetw=g&hvrand=7682030752416799449&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9072139&hvtargid=pla-407488791778&psc=1

[2] To check out Tony Robbins, Money: Master the Game, click the link - https://www.catch.com.au/product/money-master-the-game-7-simple-steps-to-financial-freedom-book-by-tony-robbins-796952/?offer_id=37134769&ref=gmc&gclid=Cj0KCQiA15yNBhDTARIsAGnwe0VRyuWdatGHDWjUxavDFYUbByQnFrcymYiK0YJQ-0sLIv240boZhYUaAlxxEALw_wcB

[3] To check out Tony Robbins, Unshakeable, click the link - https://www.amazon.com.au/Unshakeable-Your-Guide-Financial-Freedom/dp/1471164950/ref=asc_df_1471164950/?tag=googleshopdsk-22&linkCode=df0&hvadid=341744699688&hvpos=&hvnetw=g&hvrand=14442430285955173354&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9072139&hvtargid=pla-672857091020&psc=1

[4] Spaceship website - https://www.spaceship.com.au/

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