Geld vloei in die rigting van dit wat vir jou belangrik is. Verstaan wat vir jou belangrik is en jy het reeds ‘n groot stap vorentoe gegee om met jou geld te werk. Dit waarvoor jy kniel is dit wat jou óf gaan laat vlieg, óf vasgekelder gaan hou op die grond. Mense is dikwels tevrede met grond bestaan omdat hulle nie weet dat daar groter moontlikhede is nie. Die begin van ‘n nuwe lewe is om eerlike vrae oor jou lewe te vra. Is dit wat ek nou doen, wat ek wil doen, vir die res van my lewe? Maak hierdie ding, geselskap, werk of stokperdjie my werklik gelukkig? Voel ek vol nadat ek gedoen het wat ek doen, of is daar steeds ‘n gat in my siel? Dit is egter nie maklik om te kry wat jou regtig gelukkig maak nie. Die enigste werklike manier om jou lewensrigting te vind is om, gebasseer op die navorsing wat jy gedoen het, en jou intuïsie, ‘n rigting te kies en ‘n paar myl op daardie pad te loop. Jy gaan eers weet of iets vir jou bedoel is as jy tyd daarmee spandeer het. Toets jou lewe nou. As jy positief kan antwoord op die volgende vrae, is jy waar jy moet wees. As jy nie kan “ja” antwoord nie, moet jy óf ‘n nuwe lewensrigting probeer óf jy moet, in die woorde van Richard Rohr, met nuwe oë na jou lewe kyk. Hier is die vrae: 1. Is dit wat jy doen vir jou ‘n uitdaging?, 2. Bring dit wat jy doen jou nader aan mense? 3. Voel jy, dat dit wat jy doen, ‘n verskil maak aan die wêreld? 4. Voel jy ‘n sensasie van vreugde en vervullig as jy doen wat jy doen? As jy verstaan wat jy wil doen … dan … en eers dan kan jy die somme doen om te weet hoeveel geld dit jou gaan kos.
Daniel Kahneman, die gedrags-ekonoom en ‘n Nobel-Prys wenner vir ekonomie, maak die standpunt dat mense geneig is om hulleself meer positief te evalueer as wat hulle werklik is. Volgens Kahneman doen ons dieselfde met ons benadering tot beleggings. Ons word gebore met die benadering om positief te wees oor die toekoms, onsself en ons vermoë om beleggings te bemeester. Dit is eers as die lewe ons ‘n paar harde houe gegee het dat ons negatief en pessimisties word. Ons besluite, NOU, ten opsigte van die toekoms word afgelei uit historiese gegewens. Byvoorbeeld: ek het as kind ‘n prentjie geteken, en toe lag die klas vir my. My afleiding is; ek is nie goed met kuns nie; of ek is nie kreatief nie; of ek kan nie teken nie. As ek vandag die besluit moet neem of ek iets moet doen wat met teken of kuns te doene het, is my onmiddellike antwoord: “Ek is nie kreatief of kunstig nie.”
Met beleggings gebruik ons ook bogenoemde model. Miskien het jy eens op ‘n tyd jou beleggingsprentjie mooi probeer teken en toe verbrand jy jou vingers. Daar is by wyse van spreke vir jou gelag. Jy besluit dan dat aandele-beleggings nie vir jou is nie of jy belê te konsterwatief, al vereis jou finansiële posisie dat jy meer risiko moet opneem. Die ander dag sê iemand vir my; hy glo nie in belê nie want, sê hy, dit is doppel. Hy reken hy doen baie beter om sy seldsame karre te smous. Die teenpool hiervan is natuurlik mense wat wegspring en glo hulle eie vernuf gaan die ding vir hulle doen. Dan vaar hulle gewoonlik in spekulatiewe goed soos Bitcoin in. Die probleem met die oor-optimistiese persoon is dat, net soos met die negatiewe persoon, hulle optrede gedryf word deur emosie. Dit is juis emosionele besluite wat ‘n mens dom besluite laat neem.
In navorsing wat in 2015 doen is, is uitgewys dat die gemiddelde belegger baie swakker gedoen het as wat die S&P 500 (Amerikaanse Markte), in die laaste 30 jaar opgelewer het. Kyk na die aangehegte tabel. Vergelyk die “Equity Funds” tabel met die S&P 500 tabel. Die slotsom van die navorsing: emosie speel ‘n negatiewe rol in beleggers se besluite. Hulle klim op verkeerde tye in, in die mark en onttrek weer op verkeerde tye.
Hoekom moet jy jou beleggingspad saam met iemand loop? Die antwoord: NIE… soos wat baie glo, omdat jy die leek is en die Welvaart Beplanner die slim professionele persoon is nie; MAAR WEL om iemand te hê wat saam met jou dink, saam met jou navorsing te kan doen EN bowenal die emosie-faktor te minimaliseer.
One of my wealthy business friends told me about the quote in the hit series, Dallas. Bobby feels disgruntled as he felt left out in Jock’s business dealings. In the clip Jock and JR are celebrating with other businessmen. Bobby is left out in the cold. Bobby confronts Jock and Bobby says: “You gave me the power.” Jock replies with: “If I have to give you power, you have nothing. Power is not given to you. You take it!”
It is worthwhile to think about this. What does this mean in life and in business. Maybe this: we really have two choices. We can life by the big B or we can live by the big R. The B stands for blaming. Blaming others, the environment, your parents, your competition or even God for things not going your way. Clearly in this video-clip Bobby feels undervalued and not recognized. He then plays the blaming game. What Jock does is really telling him that there is another type of game to be played… the game the big R. That is the game of RESPONSIBILITY. You have the ABILITY to RESPOND. When you take the initiative, and take responsibility for the situation you have taken up power. Power is indeed not given, it is taken. The blaming game is to play victim while the game of responsibility is to live from your God given inner strength. That is where the power comes from.
To watch the clip click the link below.
Not keeping these six investment mistakes into check is like waiting for six massive waves to hit your investment boat at once. As a matter fact, sometimes only one wave is needed for you to lose all your retirement money. Maybe not at once, but gradually over time. Weather the storm by firstly understanding the risks and secondly by protecting yourself by steering your boat wisely through the swells and dips of the unpredictable world of investments.
The six mistakes are:
- Having no idea of your own investment risk profile:
Investment risk is simply stated the level of uncertainty or risk which a person is prepared to take on for an amount of returns from the investment. Daniel Kahneman, who was awarded the Nobel prize in Economics in 2002, did ground breaking work in the psychology of investing. He says that one of the major findings in his studies is that people are not so risk averse as they might think. Kahneman says that people hate losing money more than rejoicing in gaining the same amount of money. We see this for instance when people are very excited when they say that the taxman gave them money back, even though this actually means that they paid too much in the first place. After retirement, you have the conundrum that the investor cannot afford to lose money while at the same time he also needs real growth in order not to outlive his investment. The investor, after retirement, in other words, due to the current life cycle, often has no choice but to investment in a certain way. The solution here is to balance your fear of losing money with the fear of outliving your money. You can achieve this by firstly dealing with your fear on a psychological and emotional level and secondly looking the realty in the eye and planning your investments as well as you can.
2. Taking a too big a drawdown from their investments:
This is the most common mistake retiree’s make. They withdraw too much from their investment with the noble idea that they will make up for it later. Later, never comes! The ideal is not to take more from your investment than the expected growth minus inflation. In other words, if inflation is 5% and the expected growth of your investment is 10%. If gives you 10%-5% = 5%. You should therefore try not to withdraw more than 5% annually. This is low if should your investment be small. There is, a way to beat this – maybe the only way… Work as long you can and do not take any income from your investment. After retirement is your best opportunity to beat the odds. Your health may be such that a well-paid income could be still well within your reach and this will give your retirement basked the opportunity to grow by means of compound interest. Doing the maths, shows that going a mere five years without withdrawing from your retirement, makes a massive difference.
3. Having no life plan:
Money flows in the direction of life choices. That is a fact of life. Therefore, plan your life, understand the cost of your choice of lifestyle and stick to the plan as closely as possible. Doing what you love and loving what you are the surest way to have a quality life. I hear a lot of people about to retire confessing: “I know I have to keep busy.” This usually means living one long vacation. This just isn’t enough. A life plan needs the following to keep you hooked onto life: 1. You need real challenges, 2. you need to experience some meaning, 3. you need close relationships, and 4. you need to enjoy the small things of life. Learn a new skill. Make new friends. Make a difference and make time to smell the roses.0
4. Having no investment plan:
Having no investment plan means that your investment just follows the unpredictable curve of market fluctuations. It boggles me when retirees opt to use only passive investments (which follows the market) to save cost. Then markets of these investments will also use the absence of an advisor as a huge selling point because of the cost saving. This is to plan to have no plan! A good investment plan should include the following: 1. Having clear objectives, 2. Having a portfolio with a mix of defensive and growth investments, 3. Investing not only for growth but also being aware of tax issues and the costs of the investment, 4. Having an investment mix of non-correlating funds – in other words, the investments do not move together.
5. Not minding the investment costs involved:
Costs are very important. The more you pay, the less you have to invest. Costs can be divided into advisory costs and fund manager costs (I include admin and platform fees here). When it comes to advisory fees be sure to negotiate this with your wealth planner. Make sure he/she will be able to explain to you their value-add to justify their fees. Fund manager fees depends on the platform and the choice of investments. Offshore investments for example, often have higher fees than local investments. Furthermore, be careful to invest within a policy structure type of investment, rather go for so-called platform type investments. The latter is usually cheaper and more transparent. The moment when future bonuses and kickbacks are promised it usually means that you will get some of the money you paid into the investment back at a later stage. Why pay it then in the first place?
6. Not planning for tax consequences:
The biggest expense often for the retiree, are taxes. There are three types of taxes to be especially aware of 1. CGT on your investment switches. The trick here is to make sure that you make the right choice of investments from the beginning. 2. Income tax on the income you withdrawal every month. When already retired there is unfortunately not much you can do here. If you have years left before retirement, it helps to have a mix of investments like Unit Trusts, Tax-free Investments and Retirement Annuities (RA). After retirement your RA, pension and provident fund will attract income tax, other investments will attract only tax on interest bearing instruments like money market investments. 3. Estate duty tax could be a problem for those inheriting from you. If all your assets including life policies exceed 3 million rand let your wealth planner do an estate duty analysis for you and provide an estate plan for you.
Finally, in the beginning I said that investing is not complicated, however I could argue that it is confusing. What makes it confusing is the many conflicting messages and the multiple options you have in the market. Therefore, talk to someone you can trust. Not the family friend, but someone you know has a lot of experience. Also, find someone who can truly give you independent advice. Be careful if the person is linked to one insurance company.
All of us have money problems. There are those who feel that they do not have enough and need to increase their income; most fall in this group. Then there are those who have money but are terrified of losing it all. The fact remains that we need to have a health relationship with money. If you do not respect it, your money problems will remain. To have a healthy relationship with money it helps to know what emotion does the idea of money invoke in you. Money, the academics tells us are neutral but in the real world it just is not so. To flush a R200 note down the toilet will definitely not leave people in a neutral and emotionless state. To get a feel of what money does to you is to understand what power it has in relation to you or even over you.
Look at the birds below… who are you? The goal, is to be a hawk when it comes to finances.
- Ostrich: This person ignores the money subject as far as possible, doesn’t think about money and prefers an ostrich approach with the head buried in the sand.
- Crow: This person just loves the thought of being rich and can be best described as the money worshipper. They believe that money will make all their dream come true and like the crow they just love shiny new things.
- Peacock: This person loves the power which comes with money. They use money to impress and show their worth as person by means of wealth. Like the peacock which shows off its tail feathers, they like to show off their wealth.
- Hawk: This person uses his wealth wisely. They understand that money is only a means and not the goal. Like the hawk, they fly high away from danger and above the food source. They have a sharp eye and see trouble and opportunity as they arise.
Please note: it is possible to be one type at times and another at other times. Be honest if you have ostrich, crow or peacock tendencies. Remember we are all on the road towards being a hawk. Nobody have already arrived yet.
With many of our work force turning 65 each day, eyes are watching the sand in their job hourglasses drain. But before they can even think to accept their gold watch here are seven important things everyone should do in the months before they retire.
Retrenchment is one of the most difficult disasters to come a person’s way. It is a terrible loss which not only has to do with the forfeit of a salary but also threatens a person’s self-worth. The loss of a job, brings along the same traumatic state as with the loss of a loved one. It is traumatic; it is funeral and one must deal with it on several levels: (more…)
Picture 1 (below): China Debt …. as a country who are the main buyer of SA resources, the sharp growth of China debt (black dotted line) are alarming. It is a bubble waiting to burst. Strategy to adopt: conservative long-term investing. Resist the temptation to opt out of the markets. The old saying remains true: It is time in the market that matters, not timing the market.