Archive for January, 2010

Wealth creation – Its a mindset – How can I make it happen ??

Thursday, January 28th, 2010

One of the greatest stresses that most of us face concerns our finances.

I have come to a realisation that many of the financial concerns people see me about are caused by the way they think, and that is what I need to work with them on reviewing. The way we, as individuals, think is something that can be controlled, as unlike the weather, the price of fuel or the short term volatility in global and domestic markets. (as an aside many an astute investor with cash available is buying back in at the moment – wish I had more available to contribute than I am currently).

The future belongs to those who are building a diversified asset base that creates passive income. Assets put more money in your pocket. Liabilities take money out of your pocket. As you’d likely know the only good debt is debt that is used to fund income generating assets (and even then its debt that we all wish we didn’t need to have).

One of the major goals we all have when creating wealth is to have your assets throwing off more money than your expenses. If the investments you have – the ones you don’t need to actively work in – are throwing off more “passive” money than your cost of living, then you are well and truly on the road to further wealth creation and real achievement of personal goals and objectives. 

Part of you may well be thinking; “It’s alright for you .”, “We could never do that”, “It’s different for us because ….”.

If that’s what part of you is thinking right now, then that is the first ceiling we need to remove in order to have the right mindset. Successful people in all fields and endeavours (not that you aren’t already successful, but with some disciplined income diversification strategies you could be even more so) don’t say to themselves, “I could never do that, I could never afford that, it could never happen to me”.

Interviews with many successful people reveal they think, “How could I make this happen, in what ways could I afford this, what do I need to do today to start moving towards it?”

Hopefully the other side of your mind is saying, “Well what if this is true? What if I gave it a go?”

It’s a simple enough process requirement but human nature doesn’t allow us to make it easy to establish your budget, confirm your income and expenditure, assets and liabilitities – although these are all things you’d likely have good control of.

Then its all about implementing a smart cashflow management system to capture any spare cashflow on a regular and disciplined basis and harnessing it toward assets that will produce more passive income. Over time, the idea is that these assets will grow and produce more and more passive income so the cycle of passive wealth creation can continue evolving.

As a guide we could implement a regular investment plan in diversified managed funds with as little as an initial investment of $2000 and ongoing regular investment of $200 per month.

Please have a think about it. If you’re interested I’d be happy to set aside more time to explore in more detail the positive outcomes, potential opportunities and allay any concerns relevant to your own situation.

Where to from here?

Dan Smith is self employed and is for many families their trusted Financial Planner based in Rockhampton. He has clients in various locations throughout Australia but predominately in Central Queensland and specifically the geographic area encompassed by the Rockhampton Regional Council.

Posted in General, Goals & Objectives, Investment | No Comments »

Are you a young couple with a family?

Wednesday, January 6th, 2010

In this chapter of your life you may have taken on more responsibilities and begun to use debt to buy your first home.

Some significant events may have already taken place, so you’ll need to reappraise your insurance needs. These could be:

  • Getting married or committing to a long term relationship 
  • Having children or trying to grow your family 
  • If you have children one member of the couple might have chosen to stay at home to help raise the children
  • You have mortgage repayments to meet or are madly saving to buy a house 
  • You have car repayments and running costs 
  • There are credit cards to repay 
  • You likely have mobile phone and internet service costs 
  • There may be important social and professional clubs memberships 
  • You may be saving and/or paying for your children’s education

And the list goes on.

Did you know?

According to the Australian Institute of Health and Welfare, “Australia’s Health, 2008′, an average of 2,650 Australians, aged 30-39 die each year from:

  • Motor vehicle accidents,
  • Cancer for females
  • Heart diseases for males
  • Intentional Self-harm.

The top 3 causes of disability in the same age group are:

  • Injuries from road accidents,
  • Self-inflicted injuries, or
  • Anxiety and depression.

From a NATSEM study of Australian child costs in 2007, the total cost to raise two children from birth to age 21 is $537,000. Worryingly, 60% of those with dependent children haven’t got enough insurance to look after their loved ones for more than a year if they were to die.

What have you got to lose?

A lot … your family, home and way of life could be at serious risk if you’re underinsured or uninsured. Your partner may have to give up work to care for you if you’re sick or disabled as well as look after the children. As a result, your income could shrink to next to nothing, because you can’t afford to repay the mortgage.

IFSA Research shows that only 4% of families with dependent children have life insurance to levels in line with accepted industry norms. What have you got to lose when for a little more than the cost of a daily coffee you can protect yourself and the lifestyle you would like to lead now and in the future?

Insurance products that could suit your needs are:

  • Income Protection – If you were on an annual salary of $60,000 and have another 35 years of work, you have a future lifetime earning capacity of over $3.6 Million. Isn’t that an amount worth insuring?
  • Critical Illness – If you suffer a critical illness such as cancer, this pays you a lump sum so you have choices. Choices to reduce any personal debt have an extended holiday to aid your recovery or fund things such as modifying your home.
  • Total and Permanent Disability – This also pays a lump sum to provide you choices in modifying your home or paying for special medical needs.
  • Life Cover (possibly) – This pays your family or a beneficiary a lump sum if you die so they can pay off any of your outstanding debts or provide whomever you bequeath the proceeds choice to do things which you may have done together if still alive.

 

We have commented upon this topic before:

And we’ll comment on it again because protecting yourself and your future earning potential is one of the most important things that can affect our families.

Money, as we all know, seems to slip through our hands in the shortest possible time, no matter how good our intentions to save. Somehow, the dream of the long awaited holiday, or new car, or paying off the mortgage, seems as far away as ever. The reason is often painfully obvious – people work hard for their money and then ignore the essential step of applying sound financial planning to those hard earned dollars.

Financial planning sounds simple – and to a large degree it is. But too many people ignore it. Most Australian households have no financial plan. A sustainable wealth protection strategy is the very foundation of any long term financial plan.

Where to from here?

Dan Smith is self employed and is for many families their trusted Financial Planner based in Rockhampton. He has clients in various locations throughout Australia but predominately in Central Queensland and specifically the geographic area encompassed by the Rockhampton Regional Council.

Posted in Insurance | No Comments »