Category: Retirement

January 14, 2019 Blog, Financial Advisory, Investments, Retirement

Your financial journey

There are many people who profess to have the remedy for poverty, low cash flow etc. You see them all the time on social media platforms claiming to have the key to your financial future. They flash their fancy cars and expensive homes and want you to join them on this crusade.

Having been in this industry for over a decade, what I can tell you for sure is this:

  • There is no quick-fix, no matter what anyone tells you
  • There is no magic formula to get you a million dollars in 6 months
  • No trading software is going to make you rich overnight (those who make this claim are highly irresponsible)
  • Depositing large sums of money into some scheme and recruiting 10 of your friends is also not the answer

The misconception people have regarding financial advisory is that we teach people how to make money. No. That you learn through your vocation, studies and sometimes through your hobbies.

There are three very important things that we do for our clients:

  • We help them to identify the amount that must be accumulated over time in order maintain a particular standard of living
  • We show them how to protect what they have amassed by helping them make wise financial decisions and to maintain healthy financial habits
  • We assist them with investments that will grow what they have amassed at a pace that makes financial sense

To get from where you are now to where you want to be financially is actually not exciting at all. It is a long and arduous process and the journey could take you an entire lifetime (unless you marry rich, inherit millions or win the lotto!). It is a journey that requires discipline, commitment and a long-term view.

The rest is noise.

December 3, 2018 Blog, Financial Advisory, Investments, Retirement

‘Tis the season…

The tinsel is strewn and the Christmas lights are up EVERYWHERE. The holidays are fast approaching and expectations are running quite high with children and what gifts they’ll be getting.

There is nothing better than giving presents to children. The excitement and shear joy they experience with gifts is quite special. But, if your household is anything like mine, they already have more than enough.

If you are brave, and are willing to face the tears and heartache, consider not buying them gifts this year. Or rather, consider gifts of a different kind. How about an investment voucher? We’ll call it the i-voucher. You really can go to town with this one. Type and print it out and present it to them in exactly the same way you’d present a gift card – in a little envelope or small gift box tied with a ribbon. Here comes the hard part. You have to explain to them what it is and why you’re giving them this i-voucher instead of the latest X-box or Barbie doll.

Our responsibility to our children is the provision of a roof over their heads, food, education, a safe and loving home environment etc. It’s also really ok to spoil them occasionally but if you really want to prepare them for the future, teach them healthy money habits. Now is the best time to start.

For younger children (below the age of 7), perhaps a piggy bank would work better. At this age, they need a visual representation of money. Let them know that the money you give them now over the holidays is a gift. Beyond this point, consider getting them to earn it, no matter how trivial the chores may seem. They need to learn about the relationship between effort and financial reward especially during the holidays when they have more idle time. For older children, the i-voucher could work very well.

There are three important points you need to try and get across to them with this exercise.

  • They need money to be invested for the future
    • Help them dream and write down all the things they’d like to get when they are older – travel, property, a car etc.
    • Open an investment account in their name and track the performance with them. Show them how their money is growing over time and how satisfying it will be when they eventually get to spend it.
    • Delayed gratification is all about discipline – a super important lesson to teach children (and adults!)
  • They need money to spend on items they really want in the short term – ice cream, toys, movie tickets or even that X-box.
  • They need money to share with others (be it siblings, friends or people less fortunate than them.
    • This you’ll have to enforce and explain the importance of giving
November 19, 2018 Blog, Financial Advisory, Retirement

To do list before I die

I wrote my very first bucket list in 2001 and it was titled ‘to do list before I die’. I’ve added to it and removed a few items from it over the years but I’ve kept the original list in the original cheesy diary it was written in all these years!  Every now and again, I open it up and see how far I’ve come and how much work I still need to put in.

 

Here are some of the items I’ve managed to cross off:

#1 – get a degree (I was in Uni when I wrote this so it was my first priority)

#9 – go to Jamaica (I got to go to Jamaica with a few girlfriends in 2011)

#27 – have a restaurant/bakery (I owned a coffee shop in 2010 and I vowed never to go into the hospitality business again. This one is done ????)

#36 – take cooking classes (I do this as and when I have time)

 

Below are some items I still want to cross off my list but will need a lot more than wishful thinking. I’ve priced these items and I have an idea about when I’d like to cross them off and how much this will cost me.

#42 – own a farm

#44 – travel on the Rovos from Cape to Cairo

 

I got the idea after watching one of Oprah Winfrey’s shows. She had a really inspiring gentleman who’d lived a full and highly successful life. He attributed most of his success to his bucket list. He said writing down his dreams and goals, no matter how big or small, inspired him to work harder and stay focussed and also to be truly grateful for his life and achievements. He included some seemingly trivial items on the list which got him to cross off a lot more than he ordinarily would have, which ultimately inspired him to do more.

A part of the work we do for clients is to help them with their ‘bucket lists’. We help them order it from short term to long term, under various categories. Once the list is in place, no matter how big or small the items are, we put a plan in place with timelines and approximate costs to help our clients plan and ultimately achieve them. This forms a part of their overall financial plan and we track their progress on a regular basis as life happens.

Do you have a list? Is it written down or is it all in your head? Do you plan or do you just wing it? Do you know how much each dream or wish will cost you, if anything? Is there anybody keeping you accountable? How often do you revise/revisit your list? Do those revisions make sense and how does that affect your finances? We can help you with this process. Get in touch with us.

November 12, 2018 Blog, Financial Advisory, Investments, Retirement

Begin with the end in mind

I spent the past weekend in Elgin in the Western Cape. It was the 17th annual Elgin Open Gardens event where many country gardens were opened to the public for viewing. This gives avid gardeners and enthusiasts an opportunity to enjoy the expansive and colourful country gardens and a chance to buy plants/flowers on offer. It was a slow paced, inspiring treat which got me thinking – this would really be an ideal way to spend most of my retirement days, walking around in the fields at a leisurely pace and tending to my fuchsia’s and azalea’s (I discovered over the weekend that these were my favourite flowers!).

What does that picture look like for you? Consider this -it’s a Monday morning. Half past ten, to be precise. You are 69 years. What does the day look like? How is the rest of the month? And the rest of your life?

How you answer this question is dependent on your financial habits, financial planning (or lack thereof), saving and investment behaviour. How you’ve lived and how you’ve treated your body over the years will also catch up with you during this time, if not sooner. Both financial and health habits should be planned for consciously and deliberately. Saving and planning for retirement is not optional. It is a requirement if you hope to spend your retirement days with limited or no financial constraints. Unfortunately, many people get to this gloomy realization when it’s too late.

A scary 94% of South Africans retire with insufficient retirement savings.  This is largely due to the fact that a bulk of the population (approximately 85%) earn income below the 2018 living wage of R6,460. Only two percent of population earns income above R19,000 per month. If you are a part of the two percent, you are an anomaly in this country and you should use this opportunity to plan carefully for your future, regardless of the age bracket you’re in.

Start working on changing your habits now which will have a great impact on your financial future.

 

A few tips to get you moving

 

Get started

Any amount saved during your working life is better than none. As soon as you get income (of any amount) save a portion of it. A general rule of thumb is that you should be saving a minimum of 10% of your monthly gross income.

 

Invest wisely

Cash rates may be attractive in the short-term but you need to be invested more aggressively if you have any hopes of retiring comfortably. Your investments should always have a bias towards growth assets such as equities. This strategy has generated better returns historically and is expected to continue doing so in the future. Also, never put all your eggs in one basket – diversify your investments to maximise your returns in the long run.

 

Stay the course

Get invested and stay invested. This will serve you well in the long run. John C. Maxwell said it best when he said ’you will never change your life until you change what you do daily. The secret of your success is found in your daily routine’.

October 15, 2018 Blog, Retirement

F.I.R.E.

There is an interesting and growing movement among millennials called F.I.R.E. – an acronym for ‘financial independence, retire early’.

It’s young people planning to achieve financial independence and retire from their high stress jobs extremely early in their 30s and 40s. They aim to do this by drastically downsizing their living expenses and perhaps getting side gigs to supplement their income. The point is to trade material status and luxuries for more time and freedom. Many achieve this goal by foregoing the option to buy homes and opting to rent smaller and very affordable apartments instead.

Some individuals who’ve managed this seemingly impossible feat have done the following:

• No take away or eating out
• No gym
• Slower internet speed
• Not have children
• No air-conditioning
• Buying cheaper, lower qualify food/clothing

Here’s an example of one of their budgets.

Source: CNBC

Even as a financial advisor, this to me seems very extreme!  The main issue for me with this movement is the fact that modern science is allowing us to live much longer than our ancestors. If you manage to retire in your 30’s, what do you then do with the rest of your life (which could possibly be a further 60 to 70 years!)? Many of the people who’ve managed to retire early claim to be blogging, traveling and living their best lives. While this sounds great, it does not sound sustainable.

Successful retirement planning isn’t about you quitting your job as early as possible and doing nothing (or very little) until mortality. Retirement is no longer what it used to be. More and more people are opting to continue working beyond their retirement age. Some do this for financial reasons and others simply enjoy the work they’ve always done and continue to do so, at a less demanding pace.

Successful retirement is about the continuous effort in finding fulfilment and enjoyment in work (not necessarily quitting) however you define it, striving for the ultimate balance in work and life, giving back to those less fortunate than you and allowing yourself to indulge in a few pleasures that life has to offer. It’s not about running away from work but rather running towards your goals and dreams.
This can only be achieved through careful and deliberate retirement and life planning.

Have a good week!