Hey,
Happy Monday.
Markets opened back up this week with the ASX making some ground but Wall Street seemed to struggle. As the year starts off we will need to keep our ear to the ground to see if markets begin to recover from their tumultuous year just gone. The eventual bounce back is sure to provide opportunities for savvy investors.
Amazon stated this week that they will be cutting 18,000 jobs across their network as tech companies continue to struggle. Last year we witnessed an almost bloodbath across the tech industry. It will be interesting to see if there is a bounce back for 2023.
Smart Money upside #99
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, mid 30’s; household income ~ $140k; total assets ~ $700k; saving ~ $5k annually.
Frustrations
Money not working as well as it should, lack of knowledge around finances.
What they wanted from us / the advice process
Structure and direction of where to go, a plan to help with private schooling for the kids.
What success looks like for them
Money is working harder for them, on track to buy a property within 5 years, on track to retire early and have passive income to support their lifestyle.
What money strategy they were following before we went through the planning process
Surplus towards savings with no other plan.
What money strategy they chose to pursue from our planning work
Rentvesting (renting where they want to live but buying an investment property), additional super contributions and excess surplus towards building a long-term diversified share portfolio.
Key benefits of going through the process
Clear plan to arrange for the property deposit, a new easy to follow banking structure that makes easy to track and save for future investments, building a diversified investment portfolio that will generate passive income in the future and a switch to a low cost superfund with access to a range of quality passive investment options.
Value of advice after all advice fees year one: $15k
Year 20 upside after advice fees: $1.3m
If this story resonates you can book an intro call with us here.
Video of the week
When taking the fast way into the property market you can seriously sabotage your ability to further invest and build your wealth. In this video I explain a client scenario we had where they self-sabotaged without even realising it. Check out the video here.
Podcast drop
Learn the tips, hacks, and strategies to help you level up your money game. Pods released last week:
- #281 Client stories; property stretch, guilty spending, & life in the way
Upcoming events:
Free online money education to help you invest smarter and create a life not limited by money:
- Master your money mindset in 2023 – January 11, 12pm
- Get money smart in 2023 – January 27, 2023, 12pm
- Buy property smarter in 2023 – February 22, 2023, 12pm
- Build a second income investing in 2023 – March 8, 12pm
- Invest with property equity in 2023 – March 22, 2023, 12pm
Blog of the week: How to avoid being one of the 3m Aussies stressed about money
Getting all the things you want with your money can seem impossible.
We tend to focus on the things we want but don’t yet have, the dream home, the cracking share portfolio, a low/no mortgage, or the cash buffer to take some extended leave.
If you’re not yet exactly where you want to be, you focus heavily on the work that’s left to be done.
This is a good thing in one way, because when you really want something you’re more likely to work at it. But if you don’t take the time to acknowledge and celebrate the progress you’ve made to get to where you are right now, you can end up stressed and constantly thinking you’re falling short of where you want to be.
According to the 2022 Financial Wellness report from AMP, almost 3 million Australian workers are feeling moderate or severe levels of financial stress.
This isn’t just limited to people on low incomes, with one in five workers earning $100,000 and above also suffering from financial stress.
The flow on impact is costly, with one in five Australians reporting financial stress impacting workplace productivity. Worse, 25% of Australians report not enjoying life because of the way they’re managing money. And financial stress is on the rise, with the cost of poor financial wellness in Australia more than doubling in the last two years to a staggering $66.8b.
The trend is a scary one, so what can you do about it?
How to improve your financial wellness
Most people think that choosing good investments is the key to money success and financial peace of mind. And choosing good investments is important, but it’s a small part of what you need for real success.
Being truly successful with money and driving real financial wellness is about investing the right amount at the right time. It’s about optimising for tax. You want to use the right amount of leverage. You need a good debt strategy. You also need to have the right approach to your saving and day-to-day money management.
You also need to manage risk well and have a plan that never sees you forced to sell good investments at the wrong time. You need to have good goals and targets and keep yourself motivated to get there, so you build confidence and avoid money stress.
Sure, choosing good investments is important – but it’s less than half of what you need to get right if you want to come close to achieving your financial potential and creating lasting financial confidence.
Urgent vs important
Money success and financial wellbeing (unfortunately) aren’t something that will just happen on their own. Money is important, but it’s also rarely urgent.
It’s easy enough to not make the time today for your money without too much of an impact today. Just like skipping a session at the gym, treating yourself to a third helping of dessert, or not taking the time to do that bit of research or study to develop your professional skills or career, there’s no earth-shattering immediate impact.
But if you repeat these behaviours every day for years, things start to decline. The decline is slow at first, but if you let it get to a tipping point things can begin to deteriorate rapidly. Making the time to keep your money moving forward is something that’s easy to put off for a tomorrow that never seems to come around.
On the flip side, once you start taking action you start building momentum. You start building habits and behaviours that drive results. Then these results drive motivation to keep going and take your results to the next level.
The more I think about money, the more I come to realise there’s so much similarity between being money fit and being physically fit. Your previous choices around your diet and exercise routine dictate your current level of physical fitness and health.
It’s easy to get out of shape because not being active and eating makes us feel good – at least temporarily. Making the time to work out is harder than skipping your workout for a Netflix and chill session, potentially with some extra calories thrown in for good measure.
This leads us to not be as on top of our diet and exercise as we know you should be, and our physical fitness suffers as a result. Let this go for too long, and it’s easy to get way out of shape.
But just like getting fit and healthy, no matter where you’re at it’s possible to turn things around. Once you decide to make your physical health a priority and start putting in the work to make it happen, you start driving results.
You start building new habits and behaviours that have a positive impact on your health, and you start making progress. This progress might seem slow at first, but it is there. Then with focus and compounding over time, you start moving closer to where you want to be.
Keep this going, and you eventually get to your goals – from there you can then start to think about your next level of goals that are beyond what you previously thought was even possible.
Money is exactly the same.
If you’re already doing ok, giving this time and attention will take things to the next level. If you’re a little out of shape, you need to rebuild habits and behaviours that will get things back on track so you can then take things to the next level.
Just like your physical health, there are no shortcuts to money success. The financial equivalent of a fad diet or tummy tuck might deliver some quick results, but if you don’t have the right foundation, approach, habits and behaviours, any benefits will be short-lived. You, unfortunately, can’t shortcut your way to real long-term money success.
Measure backwards
Instead of just focusing on what you haven’t done or what you don’t yet have, celebrating the progress you’ve made goes a long way to reducing financial stress.
You should measure backwards – looking at your money wins over the last month, three months, year, or five years. You’ll likely be pleasantly surprised.
Then you want to give yourself a solid pat on the back. If you’re doing really well, it’s important you recognise that so you can celebrate your success. This will in turn give you more motivation to keep following the path.
If you’re not on track, that’s not ideal but also ok. Money plans don’t work for three main reasons. Either; you’ve done something wrong, there was something wrong with your plan, or something has happened that was out of your control that has impacted your results.
You’ll want to figure out which one of these it is so you can address what’s happened. Once you do, you’ll be clear on what you need to do next, and again create the motivation to keep things moving forward.
The wrap
When it comes to your money and the lifestyle it allows you to live, it’s common to want it all – right now. Ultimately, anything is possible, but you have to put in the work (and the time) to get there.
If you’re stressed about money, and you’re constantly focused on what you haven’t yet done, the journey will be a frustrating one and it will be hard to keep up the motivation you need to get the results you want.
Take the time to understand what really drives money success, focus on the important but not urgent, and measure backwards, and you’ll go a long way to reducing your financial stress, driving motivation, and creating the confidence to move forward.
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.
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Ben Nash
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.