Before I get into it for this week, reminder for our Smart Money Accelerator competition where we’re giving away 12 months of 1-1 advice + access to the Accelerator content and events. The competition is a simple one – just tell us in 25 words or less what real money success means to you – you can submit your entry here. In addition to the major prize we’ve got a bunch of other swag to giveaway, so the odds are looking good – and a lot better than powerball…
In HUGE money news this week, after almost a year the RBA has decided to pause the official interest rate. The decision came off the back of some positive inflation data that was released last week. We saw the monthly inflation rate drop down to 6.8%. This drop was more than expected, as they were only forecasting a drop of 20 basis points, however, it dropped by 60 basis points. It is important to note that we shouldn’t get too comfortable though, as the RBA has hinted at further rises later this year.
Global oil syndicate OPEC has decided to cut oil production by 100 million barrels per day. This news saw the price of oil surge. The cut comes as tensions between the US and Saudi Arabia continue to rise. Saudi Arabia stated this week that they are no longer interested in ‘pleasing the US.’ Domestically here in Australia, an immediate impact of these tensions will be the rising cost of filling up the car – just in time for the Easter long weekend.
Smart Money Upside #112
Here we unpack the numbers from a recent client we helped, what they were doing with their money when they came to see us, what they chose to do as a result of going through the financial planning process, and the financial impact and upside we helped them achieve. To chat about how to get these sorts of results, you can book an intro chat with us here.
Individual, early 40’s; household income ~ $400k; total assets ~ $1.3m; saving ~ $120k annually.
Overwhelmed and stressed by the complexity. Education around finances is always a struggle and he knows that he could be doing so much more with his money.
What they wanted from us / the advice process
Learn how to leverage the tax and investment rules, and to get a solid plan but something clear and easy to follow.
What success looks like for them
Maintaining his current lifestyle, a better understanding of the complex landscape of finances (shares, property etc.), and having an understanding of the pros and cons of paying down property debt and investment opportunities.
What money strategy they were following before we went through the planning process
Investment property with new constructions, maintaining RSUs and paying down current debts as much as possible.
What money strategy they chose to pursue from our planning work
A new banking structure, investing in new diversified equity portfolios, buying a new investment property, a new debt management strategy and a superannuation review.
Key benefits of going through the process
Education on his position as well as opportunities in front of him, a new sounding board where he can bounce ideas off advisers and get their input, and a clear and easy-to-implement plan to follow that builds substantially more long-term wealth.
Value of advice after all advice fees year one: $5k
Year 20 upside after advice fees: $7m
If this story resonates you can book an intro call with us here.
Video of the week
Australian property values are up in March for the first time in a year, suggesting the worst of the property downturn could be over. In this week’s video, I unpack what this news means for both mortgage holders as well as those looking to get into the market. Check out the full video here.
Learn the tips, hacks, and strategies to help you level up your money game. Pods released last week:
Free online money education to help you invest smarter and create a life not limited by money:
- How to save more money faster – April 19, 2023, 12pm
- How to adult with money – May 3, 2023, 12pm
- How to get started investing – May 17, 2023, 12pm
- Get tax-smart – June 21, 2023, 12pm
Blog of the week: How not investing today could be costing you over $100k
Most people that start a new diet fail. And unfortunately, it’s the same for money.
Having seen inside how thousands of people manage their money, I’ve found the real difference between those who succeed and those who fail is something so small that it can seem almost trivial.
People who are successful with their money leverage the power of momentum.
When momentum is working in your favour, each forward move becomes easier because of the step before. The power of compounding kicks in, and things start accelerating. You get better results faster with less effort.
Consider this example. If you were to save and invest just $20 per day this year, based on just the long-term sharemarket return of 9.8% that money would grow to be worth $19,373, $52,414, and then $136,447 over the next 10, 20, and 30 years.
This means that some small changes today will have a significant upside over time.
But what it also means, is that the cost of building momentum and taking action today isn’t just having a smaller investment balance today – it’s the six figures plus in wealth, you won’t build over the years to come.
If you let your money momentum fade away, before you know it another month or year has passed, and you’ve locked in an opportunity cost you can never get back.
How to keep your money momentum building
Money can be complicated and confusing – but it doesn’t have to be. The actual principles of money success are simple – but simple doesn’t necessarily mean easy. Knowing where and how to get started gives you a serious advantage.
Investing just $5 per day for a 25-year-old will grow to a staggering $905,133 by age 65 based only on the long-term Australian sharemarket return of 9.8%. That tells me you don’t need to do a lot, but you do need to be consistent.
Particularly in the current environment with high-interest rates, inflation, and the cost of living crisis, many Aussies are feeling the pinch and struggling to make ends meet. Investing for many is a long way from their focus.
But at the same time, the sharemarket in Australia and around the world is down, meaning that quality investments are selling today at a serious discount. The next 12-24 months are likely to be up and down in markets, but this period of disruption will pass. When it does, the people that were able to keep investing will be rewarded, and those that weren’t will have regrets.
Find a way to keep investing – doing anything is so much better than doing nothing – and apart from the financial upside, you’ll get a heap of peace of mind and confidence from the fact you’re moving forward.
Focus on your ‘roadblocks’
If you think about getting from the position you’re in right now to where you really want to be with your money, there is likely a list of things that are slowing you down or holding you back.
It could be things like not understanding investing, not being good at saving money, not knowing how to be smart with taxes, or any number of other financial challenges. These ‘roadblocks’ are the things standing between you and the results you want, so clearing them will help you keep your momentum building.
Take the time to think through and list out your money roadblocks, and this will become your action list. Start with the roadblock you think will have the biggest impact on your progress, then focus on clearing it. You’ll be rewarded with faster progress and an easier path to the results you want.
Get clear on your next step
True financial success is a huge goal that will often take decades to achieve. It can seem so big and far away that it’s overwhelming and almost impossible. But as the saying goes, the best way to eat an elephant is one bite at a time.
When you’re working towards your money success, there is a heap of things you can do, and a heap you will do over time – but you don’t need to do them all now.
What you need to do now is take the next step.
When you take the smartest next step for you, you’ll move closer to your goals and keep your momentum building. This in turn will make your next step easier, and so the cycle continues.
When you narrow your financial focus to taking the next step, you cut through the ‘noise’ that surrounds money, and you make it happen faster and easier.
It’s one thing to know what you should do with your money and invest, but it’s another to know why it’s the best thing for you. When you don’t understand the why behind the what, there’s often a large amount of fear that surrounds taking action. This fear can be paralysing, and hold back your momentum.
Once you’re clear on your next step, take the time to educate yourself so you understand why it really is the best move for you. When you get clear on the why, it will give you more confidence to take action sooner – meaning you’ll get the results you want faster.
Put the time aside
Money is something that’s really important, but often not urgent – this means it’s easy for it to get pushed down our to-do list for a tomorrow that never seems to come around.
If you want to get results, you need to put the time aside to make it happen. When you follow the process outlined here, your money shouldn’t need a lot of your time, but a little goes a long way.
Put a standing appointment in your calendar with yourself to check in on your money progress and take action to keep things moving forward. This will ensure your momentum consistently builds, moving you closer to the results you want and ultimately financial success and security.
Whether your financial focus is fresh or you’ve been at it for a while, keeping your momentum going will pay big dividends over time and go a long way to giving you confidence and reducing financial stress. There’s a lot to be done, but it doesn’t have to be hard if you take the right approach.
To your success,
PS: Pivot Wealth exists to help people invest smarter to create a life not limited by money. If you want help to make your next steps easier, you can book a 10 minute, no BS chat with us here.
Founder and Adviser
The information in this note is not personal advice, a guaranteed pathway to that elusive beach bod, or the lost script of Edna St. Vincent Millay’s Pulitzer Prize-winning Conversation at Midnight. This is just a bulk communication pushed out into the internet, and it doesn’t even have your name on it. Your personal situation, needs & objectives, and financial situation have not been considered in putting this together – nor have we considered your dietary preferences, the way you like your hair cut, or your favourite travel destination – but we have spent a lot of time thinking about the future of urban society, whether there is other intelligent life in the solar system, and the pervasion of soy and linseed bread in Australian metropolitan hubs. You should consider the appropriateness of any general advice in relation to your own objectives, financial situation and needs and seek advice before taking any action. You should also consider using a variety of eau de toilette fragrances to keep your partner interested and colleagues on side, not using plastic straws, and minimising your screen time. Where information relates to a financial product, you should read and understand the relevant product disclosure statement. Where information relates to your own potential for awesomeness, you should consider backing yourself totally and completely. Past performance is definitely not an indicator of future performance when it comes to investments and financial products, as well as the likelihood of your children sitting still and quiet for an hour being satisfied playing with a used piece of wrapping paper. Financial services guide.