Hey team,
Happy Monday.
Inflation data came out this week from the Australian Bureau of Statistics. In an unexpected result, inflation rose from 6.3% in March to 6.8% in April. We are down from the peak of 8.4% in December but this recent increase is more fuel for another rate rise at the RBA meeting coming up on Tuesday. A good chunk of the CPI increase was due to the price of fuel, which was emphasized by the halving of the fuel excise tax in April.
However, even though the RBA is raising rates quite consistently, the housing market is climbing at an accelerating rate. We now have 3 months of positive data with the latest CoreLogic national Home Value Index rising by 1.2% for the month of May. Sydney prices were up 1.8% for the month, the biggest gain since September 2021, and up 4.8% from January’s low. This equates to an approximately $50,000 gain in the median dwelling value. This shows us that there are loads of opportunities out there right now for savvy investors.
Smart Money Upside #120
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.
Numbers/Background
Couple, late 30’s; household income ~ $350k; total assets ~ $2.5m; saving ~ $40k annually.
Frustrations
Paying too much in taxes, inconsistent incomes with bonus structures negating saving capacity, and erratic spending.
What they wanted from us / the advice process
A clear path forward, the structure around their income and expenses, and upgrading their home for their family through a renovation.
What success looks like for them
More savings, a completed renovation with more space for the family, and ensuring that their money and long-term goals are on track.
What money strategy they were following before we went through the planning process
Saving cash in their offset account and retaining their vested shares through their employment.
What money strategy they chose to pursue from our planning work
A new banking structure, a review of their current superannuation and group insurances, a new plan for their shares from employment, buying an investment property, and better debt management systems.
Key benefits of going through the process
A better understanding regarding the trade-offs of a large capital expense (renovations) and how this would impact their future, and what needs to be aligned to make this viable as well as a better understanding of how to maximise their wealth building.
Value of advice after all advice fees year one: $50K
Year 20 upside after advice fees: $3.5m
If this story resonates you can book an intro call with us here.
Video of the week
It can be difficult to invest in super the right way. In this week’s video I unpack how to invest your superannuation money smarter in your 30’s to be rich by the time you get into your 50’s. Check out the full video here.
Client story of the week
This week I’m unpacking how this couple created a 12 month wealth uplift of $85k by investing through a trust. Check out the full video here.
Podcast drop
Learn the tips, hacks, and strategies to help you level up your money game. Pods released last week:
Upcoming events:
Free online money education to help you invest smarter and create a life not limited by money:
- Get tax smart – June 21, 2023, 12pm
- How to invest tax smart in the new financial year -July 12 , 12pm
- Plan smarter with money – Aug 16, 2023, 12pm
- How to FIRE without sacrificing your lifestyle – Sept 20, 2023, 12pm
Blog of the week: How to take advantage of the $2.5trillion stock market rally
Everyone knows you need to invest if you want to get ahead. But so many Australians still don’t invest, with recent statistics showing that 54% of Australians have no investments outside of their compulsory super fund and/or family home.
At the same time, increasingly we have larger financial and lifestyle goals, which require serious wealth to be able to achieve. This equation just doesn’t work.
Ultimately the main thing that holds people back from getting results and making progress is taking action.
You want to invest, but there are too many options and too much information, it’s hard to know where to start, all the options are confusing and you don’t want to make a mistake – so you end up doing nothing…
When this happens, you miss out on the opportunity to get your money working harder and get more out of what you have today – what I refer to as the ‘inaction trap’. This is costly at any time, but today the cost is as high as it’s been in years.
Since the end of 2022, over three months the value of US tech stocks in the Nasdaq index have increased by 15.83% (a staggering USD$2.569 trillion), delivering upside for investors.
The key to success with your money is simple – if you want to get results, you need to take action. But simple doesn’t necessarily mean easy.
That being said, there are some key things you can do to put yourself in the best position to take confident action sooner – and ultimately start getting the results you want with your money faster.
Get clear on your next step
The first part of any solid action plan is where you confirm the move you’re about to make is the best one for you. The reality is that there are a lot of different ways to be right with your money, but there’s only one right next move for you.
Buy shares, buy property, pay down debt, boost your super, and the list goes on… These are all ‘good’ things you can do that will make you money.
The key to making the best move for you is to focus on your bigger goals and targets. Once you’re clear on what you’re aiming for, you should choose the next step that will help you make the most progress toward your target in the shortest amount of time.
Educate yourself
Once you’re clearer on your next step, you need to build your knowledge. This step is crucial to give you the confidence to take action, and to overcome the fear you might be headed for a costly mistake.
An important part of this stage is focusing on any risks or downsides that come with the money move you’re considering. There’s risk in everything; buying shares has risks, as does property and super, and even saving money in a bank account has some serious risks.
Risk can’t be eliminated altogether, but it can be reduced and managed – but you have to understand where your risk is coming from first.
See how your money move fits
Most people know that if you’re considering doing something with your money, that you should take the time to make sure it fits in with all the other things going on in your financial and non-financial world. But it’s in the application of this principle that most people fall down.
When people look at how a money tactic or investment fits in with their finances, they often first look in terms of their situation today. This is important, but it’s only part of the picture.
Bigger financial and investment decisions around shares, super, or buying property will impact your position not only today but for years into the future. This means that to effectively assess how well something will actually work for you, you need to look ahead at how this move will fit today and in the years ahead.
Look ahead before you take action and you’ll go a long way to making smarter choices that will drive better results.
Your action plan
It’s great to have great money ideas, but if you want results you have to take action. Once you’re clear on what you want to do, map out every single action step that’s needed to make it happen.
This becomes your checklist to follow to turn your ideas into outcomes, and gives you an easy guide to follow to get the results you’re looking for.
Put the time aside
Because we’re time poor, and because money is something that’s important but not urgent, it’s easy for money to get pushed down our to-do list for a tomorrow that never seems to come around.
If this happens, you create an opportunity cost today that will compound every year forever. If you want to get on the front foot with your money (and stay there) you’ll need to dedicate a small amount of time to keeping things moving forward.
Set up a recurring calendar appointment with yourself or with your partner to focus on your financial next steps, celebrate the progress you’ve made, and address any issues before they turn into problems. This will help you avoid the inaction trap and keep things moving forward.
The wrap
When you have time on your side, making small money moves consistently over time will drive serious results. But it won’t just happen on its own.
So many people get pumped up with great money ideas, but ideas without action are meaningless, and definitely won’t get you to where you want to be. If you want to put yourself in a position to take confident action sooner, you need a system that works.
As James Clear says in his blockbuster best-selling book Atomic Habits; “You don’t rise to the level of your goals, you fall to the level of your systems”. Systemise the process you follow to take action on your money moves, and you’ll get the results you want faster and easier.
A bit of work to make it happen, but the results are worth it.
To your success,
Ben
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
Pivot Wealth
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.